Lci Industries · NYSE:LCII
Lci Industries — Q2 2020 Earnings Presentation
39 slides from Lci Industries's earnings presentation, Aug 11, 2020
Slide 1: LCI Industries Investor Presentation August 2020
LCI INDUSTRIES LCI Industries Investor Presentation August 2020 1
Slide 2: Forward-Looking Statements
LCI INDUSTRIES 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 obje
Slide 3: Operational and Industry Update
LCI INDUSTRIES Operational and Industry Update Taking steps to ensure the safety of team members while meeting increased demand brought on by COVID-19 Health and Safety Measures Resuming Production Increased Retail Demand ◦ Implemented heightened health and safety ◦ Production across all facilities
Slide 4: LCI at a Glance
LCI INDUSTRIES LCI at a Glance A leading supplier of highly engineered Second Quarter 2020 components primarily to the OEMs of recreational Key Metrics vehicles, buses, trailers, trucks, boats, trains, manufactured housing, and their related aftermarkets. $525.8M $0.54 IN NET SALES ADJUSTED EPS* 4%
Slide 5: Investment Case
LCI INDUSTRIES Investment Case Leading market share with unmatched depth and breadth of products Strong track record of financial performance Deep culture rooted in innovation, technology, and operational excellence Compelling industry tailwinds, including high-margin growing aftermarket, robust mil
Slide 6: Business Overview
LCI INDUSTRIES Business Overview Applicable across a number With 7 core of customer segments competencies LCI serves 3 critical Recreational Metal Fabrication Vehicle customer needs & Welding High Variation / Small batch Marine Short Runs at manufacturing with Lamination Transit & School Scale the b
Slide 7: Vision and Values
LCI INDUSTRIES Vision and Values To be a leading supplier for component parts manufacturing in the markets in which we compete • Our passion to win, coupled with a robust growth strategy, drive us to LCI Leadership be a leader in every market we enter • We believe our industry-leading innovation, th
Slide 8: Breadth and Depth of Product Offerings
LCI INDUSTRIES Breadth and Depth of Product Offerings Product Lines Industries • Towable RV Chassis • Steps • RV • Heavy & Light Truck • Furniture • Leveling Systems • Aftermarket • Manufactured Homes • Windows and Windshields • Suspension • Marine • Modular Housing • Entry and Baggage Doors Enhance
Slide 9: Financial Performance
LCI INDUSTRIES Sales Trend ($M) EBITDA* ($M) 2,476 12% CAGR 2,374 $2,336 11% CAGR 269 266 273 2,148 247 239 1,679 1,403 158 Financial 1,191 128 Performance 2014 2015 2016 2017 2018 2019 LTMQ220 2014 2015 2016 2017 2018 2019 LTMQ220 Diluted EPS, Adjusted in 2017 - 2020 • Q2 2020 net sales down 16%, F
Slide 10: Culture of Innovation and Technology
LCI INDUSTRIES Culture of Innovation and Technology • R&D expertise and innovation remains a core component of LCI's long-term strategy • Demand for OneControl building as it becomes more frequently requested and adopted amongst customers • Tire pressure management system designed to improve safety
Slide 11: World-Class Operations Driven by a Culture of Caring
LCI INDUSTRIES World-Class Operations Driven by a Culture of Caring Our Social Impact Philosophy • Bringing our core values to life through leadership development and the LCI Dream Achiever program • Supporting hundreds of nonprofit organizations by donating our time and talents • Encouraging our te
Slide 12: Driving Sustainability Through Eco-Friendly Operations
LCI INDUSTRIES Driving Sustainability Through Eco-Friendly Operations We are committed to the safety of our environment and our communities through conscious resource selection and process improvements that aim to lessen the impact of manufacturing 400 1.0m processes. Tons of toxic chemicals Solar K
Slide 13: Expanding Our Growth Potential
LCI INDUSTRIES Expanding Our Growth Potential(1) 13 (1) Amounts in millions. "Opportunity"a. Amounts amounts (inrepresent millions) Management's represent estimate Management’s of the size of estimatethe addressable of the market size based of the on current addressable products as of Q419, excludin
Slide 14: Growing End Markets to Reduce Cyclicality
LCI INDUSTRIES Growing End Markets to Reduce Cyclicality 2016 Sales Q220 LTM Sales 2022E Sales North America RV - OEM Adjacent Industries Aftermarket Europe / International Goal is to grow adjacent, aftermarket, and international to be approximately 14 60% of sales by 2022 to reduce cyclical impacts
Slide 15: Positioned to Capitalize on Industry Tailwinds
LCI INDUSTRIES Positioned to Capitalize on Industry Tailwinds LTMQ220 SALES BY END MARKET RV MARKET SHARE BY AGE 25-34 35-44 45-54 55-64 65-74 75+ N.A. RV International 30% Outdoor recreation North American industry 20% Aftermarket Outdoor Recreation $734Industry billion $734 billion 10% Adjacent Ma
Slide 16: Industry Trends
LCI INDUSTRIES Industry Trends Strong Recovery in Retail Demand - Record High Revenue and Run Rates in June and July 2020 RV Wholesale/Retail/Inventory Change 200,000 60,000 175,000 40,000 150,000 125,000 20,000 100,000 — 75,000 50,000 (20,000) 25,000 (40,000) — Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q4
Slide 17: Recent Acquisitions
LCI INDUSTRIES Recent Acquisitions • Acquired CURT, a leading aftermarket manufacturer of branded towing products and truck accessories • Purchase price of $337M, net of cash acquired, with 2019 sales of approximately $268M • Immediately accretive to growth, profit margins and EPS CURT Group • Advan
Slide 18: High-Margin, Growing Aftermarket Segment
LCI INDUSTRIES High-Margin, Growing $2,500.0 Aftermarket Segment 15% $2,000.0 • LCI sells over $1.5 billion in RV OEM components annually 10% $1,500.0 • Strong service department established on the supply side • Dealers rely on LCI as a key technical resource to provide a (i n millions) $1,000.0 hig
Slide 19: Attractive Aftermarket Growth Opportunities
LCI INDUSTRIES Attractive Aftermarket Growth Opportunities • Truck and towing aftermarket is a combined $7.5 billion+ Expansive Distribution Network addressable market, expected to grow further • CURT has a 17-year history of consistent annual sales growth; 5-year sales CAGR of 6% • Enables distribu
Slide 20: CURT Brings Revenue Diversification
LCI INDUSTRIES CURT Brings Revenue Diversification In-line with LCI’s long-term growth strategy, this transaction effectively doubles the revenues of the aftermarket business and diversifies the business, further mitigating the industry cyclicality of the RV space Increases Aftermarket % of Revenue
Slide 21: Global Expansion Opportunity
LCI INDUSTRIES Global Expansion Opportunity • Europe is second to U.S. in RV unit production (approx. 210,000 units) • Acquired Project 2000 in 2016 - European footprint expanding bed-lifts and steps • Acquired Sessa Klein in 2017 - Train windows • Acquired Metallarte in 2017 - Entry and compartment
Slide 22: Truck Accessories Towing Products
LCI INDUSTRIES Truck Accessories Towing Products 22 22
Slide 23: Track Record of Acquisitions and New Product Offerings
LCI INDUSTRIES Track Record Starting 2019 Acqusitions and New Product Offerings • Over 50 acquisitions in the last 20 years Revenue Revenue Company Acquisitions ◦ Majority of last 20 acquisitions focused outside of Q2 2006 HappiJac New product offering and bed lift systems for $15m $32m North Americ
Slide 24: Financial Overview
LCI INDUSTRIES L C I I N D U S T R I E S Financial Overview 24
Slide 25: Q2 2020 Financial Performance
LCI INDUSTRIES Consolidated Net Sales by Market Q2 2020 Financial Performance (38)% Consolidated Net Sales Operating Margin RV OEM (in thousands) 10.4% $629,068 (23)% $525,765 4.0% Second Quarter 2019 Second Quarter 2020 Second Quarter 2019 Second Quarter 2020 ADJACENT OEM Consolidated Net Income Ad
Slide 26: Consolidated Financials
LCI INDUSTRIES Consolidated Financials LTM ($ in millions except per 2014 2015 2016 2017 2018 2019 share data) Q220 Net Sales $ 1,191 $ 1,403 $ 1,679 $ 2,148 $ 2,476 $ 2,371 $ 2,336 Operating Profit $ 96 $ 116 $ 201 $ 214 $ 199 $ 200 $ 152 % of sales 8.1 % 8.3 % 12.0 % 10.0 % 8.0 % 8.4 % 6.5 % Net I
Slide 27: OEM Segment
LCI INDUSTRIES OEM Segment LTM Key Drivers $ in millions 2014 2015 2016 2017 2018 2019 Q220 • COVID-19 pandemic caused five week shutdown Sales $ 1,127 $ 1,300 $ 1,548 $ 1,977 $ 2,243 $ 2,092 $ 1,907 starting in late March 2020, negatively impacting Operating $ 89 $ 105 $ 181 $ 190 $ 167 $ 165 $ 117
Slide 28: OEM Content Per Vehicle
LCI INDUSTRIES OEM Content Per Vehicle New Towable RV Content per New Towable RV $3,230 $3,346 $3,371 $2,987 $3,022 $3,106 • Approximately 60% of OEM Segment net sales $2,690 $2,713 $2,816 $2,337 $2,148 are for Travel Trailer and Fifth-Wheel OEMs • 100% market share in existing products, excluding F
Slide 29: Aftermarket Segment
LCI INDUSTRIES Aftermarket Segment LTM Key Drivers $ in millions 2014 2015 2016 2017 2018 2019(1) Q220(1) • Robust Aftermarket is estimated to be double the Sales $ 64 $ 103 $ 131 $ 171 $ 233 $ 279 $ 429 size of the new RV market each year with higher Operating margins $ 9 $ 15 $ 20 $ 24 $ 31 $ 35 $
Slide 30: Balance Sheet Supports Growth
LCI INDUSTRIES Balance Sheet Supports Growth $ in millions 2014 2015 2016 2017 2018 2019 Q220 Cash & Equivalents $ — $ 12 $ 86 $ 26 $ 15 $ 35 $ 62 Accounts Receivable 38 42 57 82 122 200 270 Inventory 132 171 189 275 341 394 329 Other Assets 374 398 455 563 766 1,234 1,357 Total Assets $ 544 $ 623 $
Slide 31: Capital Deployment Strategy
LCI INDUSTRIES Capital Deployment Strategy Historical Use of Cash Cash Priorities Future Use of Cash Reduce Leverage Repurchases Disciplined Reinvestment to Drive Growth Dividends - 30% Dividends Acquisitions that Align to Strategy and Financial Targets Return Capital to Shareholders Acquisitions Ac
Slide 32: Operating Cash Flow and Net Debt / EBITDA
LCI INDUSTRIES Operating Cash Flow ($M) Net Debt / EBITDA* 3.06 269.50 2.68 2.16 156.61 1.05 0.82 155.08 154.50 0.38 0.24 84.91 82.68 0.09 63.26 95.02 -0.10 -0.45 31.54 32.26 -0.63 36.83 2003 2005 2007 2009 2011 2013 2015 2017 2019 2003 2005 2007 2009 2011 2013 2015 2017 2019 32 *See the Appendix to
Slide 33: Appendix
LCI INDUSTRIES L C I I N D U S T R I E S Appendix 33
Slide 34: Reconciliation of Non-GAAP Measures: Adjusted EBITDA
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Adjusted EBITDA Last Twelve Three Months Ended June 30, Six Months Ended June 30, Months 2020 2019 2020 2019 June 30, 2020 (In thousands) Net income $ 13,186 $ 47,527 $ 41,400 $ 81,893 $ 106,016 Interest expense, net 3,698 2,099 8,895 4,606 13,085 P
Slide 35: Reconciliation of Non-GAAP Measures: Adjusted Net Income and EPS
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Adjusted Net Income and Adjusted Diluted Net Income Per Common Share Last Twelve Three Months Ended June 30, Six Months Ended June 30, Months 2020 2019 2020 2019 June 30, 2020 (In thousands, except per share amounts) Net income $ 13,186 $ 47,527 $ 4
Slide 36: Reconciliation of Non-GAAP Measures: Adjusted Diluted EPS
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Adjusted Net Income and Adjusted Diluted Earnings per Share Income before Provision for Diluted earnings $ in millions, except per share amounts income taxes income taxes Net income Effective tax rate per share Year ended December 31, 2018 As report
Slide 37: Reconciliation of Non-GAAP Measures: Leverage Ratio
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Leverage Ratio (Net Debt to EBITDA) LTM $ in millions 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q220 Long-term indebtedness $ 24.8 $ 59.3 $ 62.1 $ 46.0 $ 18.4 $ 2.9 $ — $ — $ — $ — $ — $ 15.7 $ 50.0 $ 49.9
Slide 38: Reconciliation of Non-GAAP Measures: Free cash flow
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Free cash flow LTM $ in millions 2014 2015 2016 2017 2018 2019 Q220 Net cash flows provided by operating activities $ 107.0 $ 95.0 $ 203.4 $ 155.1 $ 156.6 $ 269.5 $ 191.5 Less: Capital expenditures 42.5 29.0 44.7 87.2 119.8 58.2 37.0 Free cash flow
Slide 39: Industry Statistics Summary
® LCI INDUSTRIES LClindustries Industry Statistics Summary TOTAL RECREATIONAL VEHICLES (RV) TOTAL Whotesate Uns ™ 1 Retail Uns [7 “Deatertrverony impact Tea YID Ti Toni 70) Ti Moth YID i 3i0)_oe D700 a. 780 ci I TAT 381 G3) OH ~ 2550 40% 25 640404 2 ee “39723972 9 25) 36216 Gist rm 25.486 6% ry 9995