Lci Industries · NYSE:LCII

Lci Industries — Drew Industries — Investor Presentation (November 2011)

41 slides from Lci Industries's investor presentation, Nov 8, 2011

  1. Slide 1: A Leading National Supplier of Components for RVs and Manufactured Homes

    2003 A Leading National Supplier of a Wide Variety of Components for RVs and Manufactured Homes Drew Industries Incorporated (NYSE: DW ) EXHIBIT 99.1

  2. Slide 2: 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 position, growth opportunit

  3. Slide 3: Section I: Overview

    SECTION I Overview - 2 -

  4. Slide 4: Drew's Products – Components for RVs and Manufactured Homes

    46% 9% 18% 7% 1% 1% 5% 3% 10% Drew’s Products – Components for RVs and Manufactured Homes $628 Million of Net Sales for the12 Months Ended September 30, 2011 RV Chassis, Slide - outs and Other Chassis Parts: $290 million RV Windows and Doors: $116 million Other Products: $5 million Bath Products: $1

  5. Slide 5: Drew's Segments – LTM 9/2011

    Drew’s Segments – LTM 9/2011 MH = $102 million 16% RV = $526 million 84% 90% for towable RVs - 4 - Net Sales - $628 million MH = $4 million 54% RV = $3 million 46% Segment Operating Profit - $57 million RV = $50 million 84% MH = $10 million 16% MH = $10 million 18% RV = $47 million 82%

  6. Slide 6: Financial Performance: Sales and EBITDASO

    $147 $154 $134 $183 $221 $220 $177 $143 $85 $96 $102 $108 $171 $220 $348 $448 $509 $492 $368 $313 $477 $526 $255 $325 $353 $531 $511 $398 0 25 50 75 $100 0 250 500 $750 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LTM 9/11 $ 669 $729 $669 $573 $628 (1) EBITDASO is operating profit plus deprecia

  7. Slide 7: Section II: Industries

    SECTION II Industries - 6 -

  8. Slide 8: RV Market

     90% of industry 2010 unit sales  62% of 2010 wholesale dollar sales, or $4.3 billion  Retail cost $4,000 to $100,000 per unit. Average about $25,000 RV Market  10% of industry 2010 unit sales  38% of 2010 wholesale dollar sales , or $2.7 billion  Retail cost $41,000 to $400,000+ per unit. Ave

  9. Slide 9: How RVs Are Used

     More economical family vacations › Typical RV family vacation is 28 to 59 percent less e xpensive for a family of four  Shift in U.S. culture toward more RV - related activities › College and NFL football games › NASCAR events › More active, shorter, “greener”, & family oriented vacations How RVs

  10. Slide 10: Drew RV Segment Sales and Industry Wholesale Shipments

    90% of Drew’s RV product sales are for Travel Trailers and 5 th Wheel RVs 155 178 177 157 196 214 254 281 293 262 185 138 199 207 207 74 71 62 71 55 45 43 42 42 36 24 15 18 16 13 64 72 61 49 60 62 73 61 56 55 28 13 25 25 23 59 78 101 108 171 220 346 448 509 492 368 313 477 526 $0 $100 $200 $300 $400

  11. Slide 11: Recent RV Industry Trends

    185,100 138,300 199,200 167,700 160,200 226,387 164,254 186,010 166,554 (1) 157,743 0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000 250,000 275,000 300,000 Units Travel Trailers and 5 th Wheel RVs, Drew’s primary RV market Wholesale Retail - 10 - Recent RV Industry Trends All

  12. Slide 12: Manufactured Housing (MH) Market

     Cost per sq. ft. is $41 for MH vs. $84 for site - built homes  Average retail price of $63,100 for a 1,530 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 in hurricanes than s

  13. Slide 13: MH – Industry Production

    229 226 176 144 131 104 97 95 84 65 52 31 30 26 144 123 75 49 37 27 34 52 33 31 30 19 20 21 $0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 0 50 100 150 200 250 300 350 400 - 12 - MH – Industry Production Single - Sect ion Multi - Sections Drew’s MH Sales $177 $220 $221 $ 185 $134 $154 $147 $152 $

  14. Slide 14: MH: Favorable Factors

    MH: Favorable Factors - 13 - INDUSTRY:  Demand ― Demand for quality, affordable housing is likely to increase ― Baby boomers retiring in increasing numbers ― Dealer and manufacturer inventory levels are reasonable  Availability of financing is still an issue, as is the weak overall housing market

  15. Slide 15: Section III: Strategy

    SECTION III Strategy - 14 -

  16. Slide 16: Business Strategy

    Business Strategy  Maximize profitability and return on assets through ▪ Strategic acquisitions ▪ New product introductions ▪ Market share growth ▪ Operational efficiencies ▪ Diversification to related industries  This strategy accomplished through ▪ Outstanding customer service ▪ Motivating manag

  17. Slide 17: Acquisition Criteria

    Acquisition Criteria - 16 -  Drew is a disciplined and patient acquirer  Gain market share or add products from other suppliers through asset acquisitions  Seek products or technologies that we can expand through our nationwide customer base and factory network  Become an even more extensive sup

  18. Slide 18: New Product Introductions

    New Product Introductions - 17 - Began production of entry doors for RVs Began Production of axles for towable RVs 2004 2005 2006 2007 2008 2009 2010 2011 A CQUIRE H APPIJAC : Adding patented bed lifts for RVs A CQUIRE E XTREME E NGINEERING : Expanding specialty trailer product line A CQUIRE S EATIN

  19. Slide 19: What Drew Has Done - Expanding Our Growth Potential

    What Drew Has Done - Expanding Our Growth Potential - 18 - New Product Market Potential 2008 – RV Entry Doors $ 25 million 2008/2011 – RV Furniture and Mattresses $ 150 million 2009 – Manufactured Housing (“MH”) Entry Doors $ 25 million 2009 – Focus on MH Replacement Windows $ 15 - 25 million 2010 –

  20. Slide 20: 2011 Acquisitions

    ($ in millions) Purchase Price Historical Sales Desrciption Home - Style (1) $ 7.3 $ 12 Upholstered furniture and mattresses for towable RVs in the Northwest market M - Tec (1) $ 6.0 $ 12 Components for RVs, mobile office units and manufactured homes EA Technologies $ 13.5 $ 42 Towable RV chassis an

  21. Slide 21: Content Per New Towable RV

    Content Per New Towable RV $670 $862 $1,012 $1,281 $1,374 $1,542 $1,716 $1,847 $2,010 $2,168 $2,289 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LTM 9/11 RV Segment operating profit margin 8.7 % 10.0 % 11.6 % 9.7% 9.6% 8.3% 12.2% 6.7% 5.0% 9.3% 8.9% - 20 - See Page 9 for Industry Information -

  22. Slide 22: RV Segment Net Sales by Type

    $ 473 million 90% $ 17 million 3% $ 12 million 2% $24 million 5% LTM 9/11 - $526 Million Travel Trailer & Fifth-Wheel - OEM Motorhome - OEM Aftermarket Other RV Segment Net Sales by Type $431 million 91% $ 17 million 4% $ 11 million 2% $ 16 million 3% LTM 9/10 - $475 Million Travel Trailer & Fifth-W

  23. Slide 23: Content Per New Manufactured Home

    - 100% market share in existing products would yield $3,600 to $4,000 per home - Affordability of the homes constrains content growth Content Per New Manufactured Home MH Segment operating profit margin 10.4% 10.7% 10.5% 10.4% 10.3% 8.7% 8.1% 7.2% 3.8% 10.0% 10.1% 2001 2002 2003 2004 2005 2006 2007

  24. Slide 24: MH Segment Net Sales by Type

    $72 million 71% $ 17 million 16% $ 13 million 13% LTM 9/11 - $102 Million OEM Aftermarket Other MH Segment Net Sales by Type $71 million 74% $ 16 million 17% $9 million 9% LTM 9/10 - $96 Million OEM Aftermarket Other - 23 -

  25. Slide 25: 2010 Compensation of Key Executives

    53% 14% 33% By Component Performance-Based Stock Options Salary & Other Compensation Plans Aggregate 2010 Compensation of Key Executives 31% 69% Cash vs. Equity Equity Cash - 24 -

  26. Slide 26: Section IV: Operating Results

    SECTION IV Operating Results - 25 -

  27. Slide 27: Operating Results: Three Months Ended September 30

    ($ in millions, except EPS) 2010 2011 Change Net Sales $ 146.8 $ 166.7 14% Operating Profit $ 12.7 $ 9.2 - 28% % of Sales 8.6 % 5.5% Net Income $ 8.0 $ 5.6 - 30% Diluted EPS $ 0.36 $ 0.25 - 31% Operating Results Three Months Ended September 30, - 26 - F INANCIAL P ERFORMANCE

  28. Slide 28: Operating Results: Nine Months Ended September 30

    ($ in millions, except EPS) 2010 2011 Change Net Sales $ 466.6 $ 521.6 12% Operating Profit $ 40.8 $ 42.7 4% % of Sales 8.8 % 8.2% Net Income $ 24.9 $ 26.0 4% Diluted EPS $ 1.12 $ 1.16 4% Operating Results Nine Months Ended September 30, - 27 - F INANCIAL P ERFORMANCE

  29. Slide 29: Results By Segment: Three Months Ended September 30

    ($ in millions) 2010 2011 Change Net Sales: RV Segment $ 122.1 $ 136.2 12% MH Segment $ 24.8 $ 30.5 23% Operating Profit: RV Segment $ 11.1 $ 7.7 - 30% MH Segment $ 2.9 $ 3.8 29% Operating Profit as a Percentage of Net Sales: RV Segment 9.1% 5.7% MH Segment 11.9% 12.4% Results By Segment Three Month

  30. Slide 30: Results By Segment: Nine Months Ended September 30

    ($ in millions) 2010 2011 Change Net Sales: RV Segment $ 390.7 $ 439.7 13% MH Segment $ 75.9 $ 81.9 8% Operating Profit: RV Segment $ 38.0 $ 40.4 6% MH Segment $ 8.2 $ 9.0 9% Operating Profit as a Percentage of Net Sales: RV Segment 9.7% 9.2% MH Segment 10.9% 10.9% Results By Segment Nine Months End

  31. Slide 31: Net Sales Compared to Pre-Recession Levels

    Net Sales Compared to Pre - Recession Levels - 30 - Q3 2007 – Q3 2011 ($ in millions) Q3 2007 $ 173 . 4 Impact of industry - wide shipments: Travel Trailer and Fifth - Wheel RVs – 25% decline ( 30 . 8 ) Motorhomes – 59% decline ( 3 . 9 ) Manufactured Housing – 45% decline ( 16 . 9 ) Subtotal – Impac

  32. Slide 32: Debt Position

    ($ in millions) Debt Cash and Investments Net Cash/(Debt) Cash Utilized for Acquisitions During the YTD Period 12/31/08 $ 9 $ 9 $ - $ 29 12/31/09 $ - $ 65 $ 65 $ 2 12/31/10 $ - $ 44 (1) $ 44 (1) $ 22 9/30/11 $ 8 (2) $ 1 $ (7) $ 50 Debt Position - 31 - F INANCIAL P ERFORMANCE (1) On December 28, 2010

  33. Slide 33: Balance Sheet

    ($ in millions) 9/30/08 9/30/09 9/30/10 9/30/11 Total Assets $ 346 $ 289 $ 346 $ 371 Total Debt $ 17 $ - $ - $ 8 Cash & Investments $ 9 $ 47 $ 57 $ 1 Stockholders’ Equity $ 267 $ 240 $ 272 $ 274 (3) RATIOS Days Sales in A/R (1) 19 days 20 days 21 days 23 days Inventory Turns (2) 4.7 turns 4.0 turns

  34. Slide 34: Cash Flow

    Cash Flow - 33 - Significant non - operating items since September 30, 2007 Acquisitions (11) $ 102 million Debt reduction $ 35 million Special dividend $ 33 million Stock repurchases $ 10 million Total $ 180 million F INANCIAL P ERFORMANCE

  35. Slide 35: Financial Strength

    12/31/08 12/31/09 12/31/10 9/30/11 Return on Equity 6% (2) 2% (3) 11% 11% Return on Assets 4% (2) 2% (3) 9% 8% Total Debt to Equity 0.00 0.00 0.00 0.03 Total Debt to EBITDA (1) 0.20 0.00 0.00 0.12 Financial Strength (1) EBITDA is operating profit plus depreciation, amortization and goodwill impairme

  36. Slide 36: The Future

     Increasing RV content  RV recovery from recession  Demographic tailwind  Exploring similar industries  Affordable housing recovery The Future - 35 -

  37. Slide 37: Stock Price History

    Stock Price History $3 $5 $8 $14 $18 $28 $26 $27 $44 $12 $6 $21 $23 $24 0 5 10 15 20 25 30 35 40 45 50 2000 2001 2002 2003 2004 2005 2006 2007 10/5/07 2008 3/9/09 2009 2010 11/1/11 ▪ Drew has 22 million shares outstanding and a market capitalization of approximately $520 million as of November 1, 20

  38. Slide 38: Analyst Coverage

    Analyst Coverage - 37 - CJS Securities Torin Eastburn – (914) 287 - 7600 Thompson Research Group Kathryn Thompson – (615) 891 - 6206 Sidoti & Company, LLC Scott Stember – (212) 453 - 7017 Avondale Partners, LLC Bret Jordan – (617) 314 - 0487

  39. Slide 39: Thank you!

    Thank you! Joseph S. Giordano III CFO & Treasurer 914 - 428 - 9098 joe@drewindustries.com OR VISIT OUR WEBSITE: www.drewindustries.com For more information contact: - 38 - Fredric M. Zinn President and CEO 914 - 428 - 9098 fred@drewindustries.com

  40. Slide 40: Reconciliation of Operating Profit to EBITDA and EBITDASO

    ($ i n millions)` 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LTM 9/30/11 Operating Profit (Loss) $ 20.3 $ 29.2 $ 34.3 $ 44.0 $ 57.7 $ 55.3 $ 66.0 $ 19.9 $ (35.6) $ 45.2 $ 47.3 Depreciation & Amortization $ 8.4 $ 7.3 $ 7.8 $ 9.3 $ 12.0 $ 15.7 $ 17.6 $ 17.1 $ 18.5 $ 17.1 $ 19.4 Goodwill Impairm

  41. Slide 41: Reconciliation of Segment Results to Consolidated

    ($ in millions) 12 Months Ended 2007 2008 2009 2010 9/30/11 Net Sales: RV Segment MH Segment $ 491.8 176.8 $ 368.1 142.4 $ 312.5 85.3 $ 477.2 95.6 $ 526.2 101.6 Total Net Sales $ 668.6 $ 510.5 $ 397.8 $ 572.8 $ 627.8 Operating Profit: RV Segment MH Segment $ 60.1 14.2 $ 24.6 10.3 $ 15.7 3.2 $ 44.4 9

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