Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (May 2008)
37 slides from Lci Industries's investor presentation, May 14, 2008
Slide 1: A Leading National Supplier of Components for RVs and Manufactured Homes
NYSE A Leading National Supplier of a Wide Variety of Components for RV's and Manufactured Homes
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains 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 posi
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: Company Overview
Company Overview (0) Headquartered in White Plains, New York - 10 employees 31 manufacturing facilities in the U.S. Approximately 3,600 employees nationwide Organic growth from 2001 through 3/31/08 was nearly $142 million or a 7% average annual growth, excluding price increases and acquisitions. Fin
Slide 5: Drew's Companies
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 Exterior panels for RVs © Lippert Components, Inc. - Acquired 1997 > Chassis and chassis parts for RVs and MHs
Slide 6: Drew's Management Team
Drew's Management Team . . INNOVATIVE & Highly respected and experienced EXPERIENCED management: MANAGEMENT >Leigh J. Abrams, CEO 35+ years >Fredric M. Zinn, CFO 25+ years Leigh Abrams Excellent management training and-pavawebster— incentive programs Fredric Zinn David L. Webster, CEO, Chairman 30+
Slide 7: Drew's Segments — LTM 3/31/08
Drew's Segments — LTM 3/31/08 Revenues - $655 million MH = $168 million 26% RV = $487 million 74% 90+% for towable RVs MH = $15 million 19% Segment Operating Profit - $76 million v Sit, =e RV = $61 million 81%
Slide 8: Drew's Products
Drew's Products Sales - $655 million 12 Months Ended March 31, 2008 RV Chassis, Slideouts and Other Chassis Parts: $314 million 9 MH Windows, Doors and 11% Screens: $72 million 10% MH Chassis and Chassis Parts: $67 million 4% MH and RV Bath Products: $23 million y Specialty Trailers: $21 million T%
Slide 9: Supplier to Industry Leaders
Supplier to Industry Leaders @® Outstanding customer service and national coverage, with 31 production facilities (approximately 2.8 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 B
Slide 10: Business Strategy
Business Strategy ® 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 Low cost manufacturing:
Slide 11: Content Per Vehicle - RV
Content Per Vehicle - RV Peak potential is $2,500 to $2,800 per RV 90+% of RV segment sales are for Towable RVs st 2 2001 2002 2003 2004 2005 2006 2007 L™ Operating 3/31/08 profit margin 8.7% 10.0% 11.6% 9.8% 9.7% 8.6% 12.8% 12.6% (1) Excludes sales of specialty trailers, which are Included In the R
Slide 12: Content Per Home - MH
Content Per Home - MH Peak potential is $3,300 to $3,400 per home 2001 2002 2003 2004 = 2005 2006 2007 u™ Operating 3/31/08 Profit margin 10.8% 10.9% 10.8% 10.5% 10.6% 9.1% 8.5% 8.7% See Page 21 for Industry Information 3
Slide 13: Recent Product Introductions
Recent Product Introductions Estimated Drew Estimal (in millions) ‘Market Annualized ee Potential Sales Level Share Slide-out mechanisms for motorhomes $ 65 $9 14% Windows for people movers 10 $3 30% Axles for towables 75, $30-$35 40%-47% Steps for RVs 20 $11 55% Bed lifts for “toy hauler” RVs 20 $1
Slide 14: Acquisition Criteria
Acquisition Criteria AC irer © Drew is a disciplined and patient acqu © Target price less than 6 times pro forma ® Immediately accretive © Complementary to our core RV (includi specialty trailers) and MH markets © Seek to acquire products or technologi STRATEGIC QUISITIONS EBITDA Ng es that we can i
Slide 15: Acquisition History
Acquisition History — 22 Acquisitions STRATEGIC ACQUISITIONS rary) May 2005 June 2006 Better Bath Venture Welding Happijac May 2007 MH Chassis. Bed lifts for Coach Step Annual sales of “toy haulers” Electric steps for $18 mi Annualized sales motorhomes. Annual of $15 million sales of $2 million Bath
Slide 16: Investments
Investments ® Kinro and Lippert have extensive R&D departments ® Since January 1998: > Invested over $150 million in plant and equipment > Invested over $132 million for acquisitions > Invested $19 million for stock repurchases at an average price of $4.53 per share ® These investments have been acc
Slide 17: RVs - Industry Wholesale Shipments
RVs - Industry Wholesale Shipments 90+% of Drew's current RV product sales are for Travel Trailers and 5th Wheel RVs Travel Trailers & 5th Wheel 1 Other Towables |B Motorhomes U8) gq (213) e439! (Thousonds of Vehicles) 370!" 1998 ©1999-2000 2001S «2002-2003 2004) 2005 2006») 2007S 2008 Drew Rv RV Sa
Slide 18: RV Market
RV Market TOWABLE RVS (90+% of Drew's RV segment revenues) = ® 84% of industry 2007 unit sales a ® 47% of 2007 wholesale dollar Travel trailer Fifth wheel travel trailer sales, or $5.5 billion Be vo ~ © Retail cost $4,000 to $100,000 per ao ye unit. Average about $20,000 ‘evlieitor ith SnoduliRY Fro
Slide 19: Trends In RV Market
Trends In RV Market STRONG LONG-TERM GROWTH PROSPECTS ® Positive Demographic Trends: >» Americans 50 and over is a prime market for RVs >» According to census projections in March 2004, there are expected to be 20 million more people over 50 by 2014 ® Industry Advertising Campaign: > Target Market 2
Slide 20: How RVs Are Used
How RVs Are Used STRONG LONG-TERM GROWTH % Fe PROSPECTS © Shift in U.S. culture toward more RV-relate 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
Slide 21: MH — Industry Production
MH — Industry Production EEE Multi-Section IEEE Single-Section —lll= Drew's MH Sales 250 (Homes in thousands, Dollars in millions) $221 $220 200 150 100 50 ° 1998 1999-2000» 200120022003» 2004 = 20052006. «= 2007S 2008 (est) (1) Includes approximately 3,500, 15,000 and 3,000, for 2004, 2005 and 2006
Slide 22: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market 10} 10} 10} 10} 10} 10} STRONG LONG-TERM GROWTH Cost per sq. ft. is $39 for MH vs. PROSPECTS $91 for site-built homes : ‘ Average retail price of $62,300 for a 1,595 sq. ft. MH 9 million manufactured homes across the U.S. Improved quality, appearance and safety Studi
Slide 23: MH: Industry Financing Trends
MH: Industry Financing Trends STRONG LONG-TERM GROWTH . a PROSPECTS ® Improved lending practices manne ® Conventional financing more common than chattel; improves collateral ® Subprime market woes could help MH ® New proposed legislation would increase FHA chattel loan limits (home only)on manufactu
Slide 24: MH: Other Favorable Factors
MH: Other Favorable Factors ® STRONG LONG-TERM GROWTH aps . PROSPECTS Affordability and quality eaional Baby Boomers retiring in increasing numbers Dealer and manufacturer inventory levels are reasonable Potential for continued rebuilding in the Gulf Coast Favorable HUD code revisions Improved indus
Slide 25: Drew's Ownership and Governance
Drew's Ownership and Governance © Executives and Directors currently own 10% © Drew's Corporate Governance Program > Ranked in the 83rd percentile of all S&P 600 Companies by RiskMetrics Group (formerly ISS) ® Included in S&P SmallCap 600 Index and Russell 2000 Index
Slide 26: Financial Performance
Financial Performance ® Stock Price History > The price of Drew's Common stock Is nearly 8 times the price as of December 31, 2000 > Drew has 22 million shares outstanding and a market capitalization of approximately $500 million as of May 6, 2008 7 2000 2001 2002 2003 2004 2005 2006 10/5/07 2007 5/
Slide 27: Operating Results
Operating RESUITS — ayanciarrceroemance Year Ended December 31, (except as noted) 2005 2006 +2007” vs 2006 Sales $669 $729 $669 -8% | $655 Operating Profit $57.7 $55.3 $66.0 +19% $64.4 % of Sales 8.6% 7.6% 9.9% 98% Net Income $33.6 $31.0 $39.8 +28% $39.3 Diluted EPs" $1.56 | $1.42 | $1.80 | +26%| $1
Slide 28: Results By Segment
Results By Segment 12 Months Ended FINANCIAL PERFORMANCE (Sin millions) 2007 12/31/05 12/31/06) 12/31/07 vs 2006 3/31/08") Net sales RV Segment $447.7 | $508.8 $491.8 3% $486.7 MH Segment $2215 | $220.4 $176.8. -20% | $168.2 Operating Profit RV Segment $ 433] $ 436) $ 631 +45% | $61.2 MH Segment $ 2
Slide 29: Results By Segment
Results By Segment (Sin millions) 12 Months Ended FINANCIAL PERFORMANCE Net Sales: RV Segment $ 447.7 $ 508.8 $ 491.8) $ 486.7 MH Segment 221.4 220.4 176.8 168.2 Total Net Sales $ 669.1 | $ 729.2 | $ 668.6) $ 654.9 Operating Profit: RV Segment $ 43.3 $ 43.6 $ 631) $ 61.2 MH Segment 23.5 20.1 15.1 14
Slide 30: Operating Results
Operating Results Three Months Ended March 31, FINANCIAL PERFORMANCE (Sin millions, except EPS) 2007 Sales $1729 | $159.1 | 8% Operating Profit $16.6 $ 15.0 -10% % of Sales 9.6% 94% Net Income $ 9.6 $9.1 -5% Diluted EPS $ 0.44 $0.41 7%
Slide 31: Results By Segment
Results By Segment Three Months Ended March 31, FINANCIAL PERFORMANCE 2007 2008 Net sales RV Segment $129.1 $124.0 -4% MH Segment $43.8 | $ 35.2 | -20% Operating Profit RV Segment $16.2 $ 14.3 -12% MH Segment $ 2.9 $25 -14% Operating Profit as a Percentage of Net Sales RV Segment 12.5% 11.5% MH Segm
Slide 32: Balance Sheet 12/31/07
Balance Sheet 6 12/31/07 FINANCIAL PERFORMANCE Total assets $311 $346 $362 Total debt $ 56 $ 27 $ 24 Invested cash $ - $ 3 $ 53 $ 46 Stockholders’ equity | $168 $205 $252 $262 RATIOS Days sales in accounts 21days | 1édays | 15 days | 20 days receivable") Inventory turns 65 turns | 5.6 turns | 6.3 tu
Slide 33: Financial Strength
Financial Strength FINANCIAL PERFORMANCE 12/31/05 12/31/06 12/31/07 3/31/08 || ] = T | Total Deb to EBITDA" 1) EBITDA is operating profit plus depreciation and amortization (see page 37)
Slide 34: Peer comparison
Peer comparison FINANCIAL PERFORMANCE Forward P/E ROA —-ROE Drew (DW) 127 11.5 Champion (CHB) N/A 15.0 2% (2%) Fleetwood (FLE) N/A N/A (2%) (62%) Monaco (MNC} 775 26.4 2% 1% Spartan (SPAR) 97 INA 12% 25% Thor (THO) 9.9. 10.3 13% 21% Winnebago (WGO) Source: Capital IQ, May 7, 2008, except forward P/E
Slide 35: Analyst Coverage
Analyst Coverage Avondale Partners, LLC: Kathryn Thompson - (615) 467-563 BB&T Capital Markets: John Diffendal - 615 340-8284 Ferris, Baker Watts, Incorporated: John Rogers - 410 659-4645 RBC Capital Markets: Edward Aaron - 303 595-1127 Sidoti & Company, LLC: Scott Stember - 212 453-7017 Chery! Cort
Slide 36: Thank you!
Thank you! For more information contact: Leigh J. Abrams President & CEO 914-428-9098 leigh@drewindustries.com Fredric M. Zinn Executive VP and CFO 914-428-9098 fred@drewindustries.com OR VISIT OUR WEBSITE: www.drewindustries.com > =36-
Slide 37: Reconciliation of Operating Profit to EBITDA
Reconciliation of Operating Profit to EBITDA FINANCIAL PERFORMANCE LM 3/31/08 | ($in millions) 2001 + 2002 2003 2004 2005 2006 2007 eae $20.3) $29.2 | $34.3] $44.0) $57.7) $55.3| $66.0) $ 64.4 Depreciation & Amortization $ 84] $7.3] $ 78] $ 93) $12.0| $15.7| $17.6] $17.2 EBITDA $28.7| $365) $42.1) $