Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (November 2008)
39 slides from Lci Industries's investor presentation, Nov 10, 2008
Slide 1: A Leading National Supplier of a Wide Variety of Components for RVs and Manufactured Homes
A Leading National Supplier of a Wide Variety of Components for RVs and Manufactured Homes
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain certain “forward-looking statements” within the meaning of the Private Secutities Litigation Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive p
Slide 3: About Drew Industries
About Drew Indusiries A leading national manufacturer of quality components for Recreational Vehicles (RV) and Manufactured Homes (MH)
Slide 4: Company Overview
Company Overview © Headquartered in White Plains, New York - 11 employees ® 36 manufacturing facilities in the U.S. © Approximately 3,000 employees nationwide © Content per Recreational Vehicle has grown at 21% annually since 2001; Content per Manufactured Home at 15%
Slide 5: Financial Performance
Financial Performance Sales and EBITDA (in millions) T == RV Segment sales = MH Segment sales == EBITDA‘) y 2102 $729 L $669 $669 $750 500 250 2001 2002 2003 2004 2005 2006 2007. LTM 9/08 (1) 2001- LTM September 2008 EBIDTA CAGR = 12%. EBITDA is operating profit plus depreciation and amortization (s
Slide 6: Drew's Companies
Drew's Companies © Kinro, Inc. - Acquired 1980 > vvvy 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 an
Slide 7: Drew's Management Team
Drew's Management Team , INNOVATIVE & Highly respected and EXPERIENCED experienced management: ——~ as DREW >Leigh J. Abrams, CEO 35+ years >Fredric M. Zinn, President 25+ years | Leigh Abrams Fredric Zinn LIPPERT - KINRO) Jason D. Lippert, CEO, President and Chairman of Lippert 13+ years Excellent m
Slide 8: Drew's Segments — LTM 9/30/08
Drew's Segments — LTM 9/30/08 Revenues - $572 million MH = $149 million 26% MH = $14 million 25%
Slide 9: Drew's Products
Drew's Products Sales - $572 million 12 Months Ended September 30, 2008 RV Chassis, Slide-outs and Other Chassis Parts: $270 million 9 MH Windows and 2% Screens: $67 million 9/ MH Chassis and chasle” Parts: $59 million MH and RV Bath 4% Products: $22 milion Specialty Trailers: 3% $16 million 6% " RV
Slide 10: Supplier to Industry Leaders
Supplier to Industry Leaders Outstanding customer service and national coverage, with 36 production facilities (approximately 3.0 million sq. ft.), make us a key partner with our customers, including: > Fleetwood (NYSE: FLE) > Skyline (NYSE: SKY) > Coachmen (NYSE: COA) > Forest River (owned by Berks
Slide 11: Business Strategy
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 profit incentives and training progra
Slide 12: Content Per Vehicle - RV
Content Per Vehicle - RV Peak potential is $2,700 to $3,000 per RV 90+% of RV Segment sales are for Towable RVs 2001 2002 2003 2004 2005 2006 2007 L™ Operating 9/30/08 profit margin 8.7% 10.0% 11.6% 9.8% 9.7% 8.6% 12.8% 9.9% (1) Excludes sales of specialty trailers, which are included in the RV segm
Slide 13: Content Per Home - MH
Content Per Home - MH Peak potential is $3,400 to $3,700 per home 2001 2002 2003 2004 2005 2006 2007 LT™ Operating 9/30/08 Profit margin 10.8% 10.9% 10.8% 10.5% 10.6% 9.1% 8.5% 9.3% See Page 22 for Industry Information
Slide 14: Acquisition Criteria
Acquisition Criteria ona © Drew is a disciplined and patient acquirer © Target price less than 6 times pro forma EBITDA ® Immediately accretive ® Complementary to our core RV (including specialty trailers) and MH markets ® Seek to acquire products or technologies that we can introduce through our na
Slide 15: Strategic Acquisitions
isitions STRATEGIC ACQUISITIONS Acquisition History — 23 Acqu 1980 — 2005 May 2007 June 2006 COACH STEP 8 Kinro (1980) HAPPHAC Teer Ne cay land Lippert inal Annual sales Components (1997) of $2 million nual sales of july 2007, EXTREME january 2007 STEELCO MH & RV Chassis TAS ENGINEERING EQUA-FLEX An
Slide 16: Seating Technology
Seating Technology (0) {0} Furniture products primarily for towable RVs, including folding sofas for toy hauler RVs, a full line of upholstered furniture, mattresses, decorative pillows, wood-backed valances and quilted soft good products Excellent reputation in the RV industry Fragmented, regional
Slide 17: Investments
Investments ® Kinro and Lippert have extensive R&D departments ® Since January 1998 > Invested over $154 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 September 30, 2008 ® The
Slide 18: RV Market
RV Market TOWABLE RVS (90+% of Drew's RV Segment revenues) farm =r ® 84% of industry 2007 unit sales Sta, Sa ® 47% of 2007 wholesale dollar Travel trailer Fifth wheel travel trailer sales, or $5.5 billion L i - ~ © Retail cost $4,000 to $100,000 per ar aa unit. Average about $20,000 cel icon with re
Slide 19: RVs - Industry Wholesale Shipments
RVs - Industry Wholesale Shipments 90+% of Drew's RV product sales are for Travel Trailers and 5'" Wheel RVs (Vehicles in thousands, Sales in millions} Units ravol Trailers & 5® Wheel S09: ther Towables Motorhomes MH Drew's RY Sales 400 300 200 100 ° 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Slide 20: Trends In RV Market
Trends In RV Market STRONG LONG-TERM GROWTH Hee é PROSPECTS ® 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 —"-T over 50 by 2014 L— © Industry Advertising Campaign > Target
Slide 21: How RVs Are Used
How RVs Are Used STRONG LONG-TERM GROWTH OSPECTS © Shift in U.S. culture toward more RV-related activities > College and NFL football games > NASCAR events , > “Toy Haulers” ® More economical family vacations > Typical RV family vacation up to 74% less expensive © Many RVs are “parked” over the long
Slide 22: MH — Industry Production
MH — Industry Production (Homes in thousands, Dollars in millions) Units Sales 400 $250 === Multi-Sections =m Single-Section =m Drew's MH Sales $225 366 $220 $200 300 S175 250 $150 200 $125 $100 150 S75 100 S50 50 $25 — sO 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Est Drew's MH Segment
Slide 23: Manufactured Housing (MH) Market
Manufactured Housing (MH)Market 10} ® ® 10} ® STRONG LONG-TERM GROWTH Cost per sq. ft. is $40 for MH vs. PROSPECTS $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 sho
Slide 24: MH: Industry Financing Trends
MH: Industry Financing Trends STRONG LONG-TERM GROWTH * . PROSPECTS ® Improved lending practices = ® Conventional financing more common than chattel; improves collateral ® Subprime market woes could help MH ® Recently passed legislation increased FHA insured chattel loan limits (home only)on manufac
Slide 25: MH: Other Favorable Factors
MH: Other Favorable Factors STRONG LONG-TERM GROWTH PROSPECTS ® 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 ® Berksh
Slide 26: Financial Performance
Financial Performance © Stock Price History > Drew has 21 million shares outstanding and a market capitalization of approximately $250 60 million as of November 3, 2008 2000 2001 2002 2003 2004 2005 2006 10/5/07 2007 11/3/ 08" (December 31 unless noted) During 2008, Drew repurchased 447,400 shares o
Slide 27: Operating Results
Operati Ng ReESU Its FINANCIAL PERFORMANCE Year Ended December 31, (except as noted) 2005 2006 2007 $669 $729 $669 Operating Profit $57.7 $55.3 $66.0 % of Sales 8.6% 7.6% 9.9% Net Income $33.6 $31.0 $39.8 +28% Diluted EPS $1.56 | $1.42 | $1.80 +26% EBITDA” $69.7 | $71.0 | $83.5 +18% (1) Sales beginn
Slide 28: Results By Segment
Results By Segment FINANCIAL PERFORMANCE (Sin millions) 2007 LTM 12/31/05 12/31/06 12/31/07 vs 2006 9/30/08") Net sales RV Segment $ 447.7 $ 508.8 $491.8 -3% $422.6 MHSegment | $ 221.5 $ 220.4 $176.8 -20% $149.2 Operating Profit RV Segment $ 43.3 $ 43.6 $ 63.1 +45%, $ 419 MHSegment | $ 23.5 $ 20.1 $
Slide 29: Operating Results
Operating Results Three Months Ended September 30, FINANCIAL PERFORMANCE (s in millions, ex Sales $173.4 $124.3 -28% Operating Profit $ 18.3 $ 45 -75% % of Sales 10.5% 3.6% Net Income $ iital $ 2.6 -77% Diluted EPS $ 0.50 $0.12 -76% Sales since the latter part of 2006 have been negatively impacted b
Slide 30: Results By Segment
Results By Segment Three Months Ended September 30, FINANCIAL PERFORMANCE 2007 Net sales RV Segment $127.1 ESO -33% MH Segment $ 46.3 $ 38.6 -17% Operating Profit RV Segment $ 17.0 $ 4.6 -73% MH Segment | $ 4.0 $) 3.9 -3% Operating Profit as a Percentage of Net Sales RV Segment 13.4% 5.4% MH Segment
Slide 31: Operating Results
Operating Results Nine Months Ended September 30, FINANCIAL PERFORMANCE (s in millions, ex Sales $530.1 $433.9 -18% Operating Profit $55.8 $ 35.0 -37% % of Sales 10.5% 8.1% Net Income $ 33.3 $ 20.9 -37% Diluted EPS $ 1.51 $ 0.95 -37% Sales since the latter part of 2006 have been negatively impacted
Slide 32: Results By Segment
Results By Segment Nine Months Ended September 30, FINANCIAL PERFORMANCE (Sin millic 2007 2008 Net sales RV Segment $390.2 $320.9 -18% MH Segment $ 140.6 $113.0 -20% Operating Profit RV Segment $ 53.1 $ 31.9 -40% MH Segment $122 $ 11.0 -10% Operating Profit as a Percentage of Net Sales RV Segment 13
Slide 33: Balance Sheet
Balance Sheet FINANCIAL PERFORMANCE (Sin millions) 12/31/05 12/31/ r 9/30 Total assets $307 $311 $346 $346 Total debt $ 73 $ 56 $27 $ 17 Invested cash $ - $ 3 $ 53 $ 8 Stockholders' equity $168 $205 $252 $267 RATIOS Days sales in accounts 21 days | lédays | 15days | 19 days receivable" _ Loe Invento
Slide 34: Financial Strength
Financial Strength FINANCIAL PERFORMANCE 12/31/05 12/31/06 12/31/07 9/30/08 Return on Equity 24% 16% 17% 11% Return on Assets 12% 9% 12% 8% Total Debt to | | ’ ) Equity Ce tee 0.1 0.1 Total Debt to eae) ie 0.8 0.3 0.3 1) EBITDA is operating profit plus depreciation and amortization (see page 38)
Slide 35: Peer comparison
Peer comparison FINANCIAL PERFORMANCE Irailing Forward : P/E P/E ROA Drew (DW) 7.6 | 139 | 1% 14% Champion (CHB) N/A 6.4 2% (3%) Fleetwood (FLE) N/A N/A (4%) (25%) Monaco (MNC) N/A N/A (4%) (31%) Spartan (SPAR) 3.6 10.9 16% 33% Thor (THO) 10.8 14.5 9% 13% Winnebago (WGO) 61.3 13:1 (1%) 1% Source: Ca
Slide 36: Analyst Coverage
Analyst Coverage Avondale Partners, LLC Kathryn Thompson — (615) 467-5637 CJS Securities Mitch O'Brien — (914) 287-7600 Janney Montgomery Scott LLC John T. G. Rogers — (202) 955-4316 RBC Capital Markets Edward Aaron — (303) 595-1127 Sidoti & Company, LLC Scott Stember — (212) 453-7017 =36-
Slide 37: Thank you!
Thank you! For more information contact: Fredric M. Zinn President 914-428-9098 fred@drewindustries.com Leigh J. Abrams Chief Executive Officer 914-428-9098 leigh@drewindustries.com OR VISIT OUR WEBSITE: www.drewindustries.com -37-
Slide 38: Reconciliation of Operating Profit to EBITDA
Reconciliation of Operating Profit to EBITDA FINANCIAL PERFORMANCE u™M (Sin millions) 2001 + 2002-»«- 2003»: 2004 «2005-2006 «= 2007-—«9/30/ Operating Profit Depreciation & Amortization | $ 8.4) $7.3) $78) $9.3| $12.0) $15.7] $17.6| $168 $20.3| $29.2| $343| $44.0] $57.7| $55.3] $46.0] $45.2 EBITDA $
Slide 39: Results By Segment
Results By SEQMEN Fimancia PERFORMANCE 12 Months Ended (Sin millions) Net Sales: RV Segment $ 447.7 $ 508.8 $491.8 | $ 422.6 MH Segment 221.4 220.4 176.8 149.2 Total Net Sales $ 669.1 ee $668.6 | $571.8 Operating Profit: RV Segment $ 433 $ 43.6 $ 63.1 $ 419 MH Segment 23.5 20.1 TS: 13.9 Total Segmen
Drew Industries — Investor Presentation (November 2008) on 6ix