Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (November 2009)
37 slides from Lci Industries's investor presentation, Nov 10, 2009
Slide 1: Drew Industries Incorporated
Drew Industries Incorporated (NYSE: DW) 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 may contain catin “fowardiootng statement" within the mearing ofthe Pivale Secures Ligation Reto act of 1998 wih respect fo franciol conation. resus of operations. busness stotegies, operaing efficiencies or ‘Syrerges,compehve postion. growth opporumtias
Slide 3: Financial Performance
Financial Performance Sales and EBITDA (in millions) RY Segment sles = MH Segment sales — €8ITOA" $100 $750 500 2001 2002 2002” 2004” 2008 2006 2007" 2008” LTM 9109 (1) EBITDA is operating prot plus depreciation, amortization and goodwill impairment (see page 33).
Slide 4: Drew's Companies
Drew's Companies * Chassis and chassis parts for RVs and MH * RV slide-out mechanisms and solutions * Manual, electic, and hydraulic stabilizer and iting systems for s * Entry and baggage doors for RVs * Axles and suspension systems * Toy hauler RV ramp doors Fumiture and mattresses for RVs * Entry
Slide 5: Drew's Management Team
Drew's Management Team J. Abrams, Chairman, 35+ years 1 Fredric M. Zinn, President and CEO, 25+ years Leigh Abrams Fredric Zinn LIPPERT - KINRO Jason D. Lippert, CEO, President and Chairman of Lippert and Kinro, 13+ years Jason Lippert
Slide 6: Drew's Segments — LTM 9/2009
Drew's Segments — LTM 9/2009 Revenues - $370 million MH = $97 million 26% RV = $273 million 74% 90+% for towable RVs Segment Operating Profit - $12 million (MH = $2 milion 21% RV = $10 million 79%
Slide 7: Drew's Products
Drew's Products Sales - $370 million 12 Months Ended September 30, 2009 RV Chassis, Slide-outs MH Windows and 42% and Other Chassis Screens: $47 milion 13% Parts: $155 milion MH Chassis ond Chossis Ports: $32 milion 9% MH and RV Bath Products: $16 milion 4% Specialty Trailers: ™% milion 2% $8 milion
Slide 8: Economic and Market Conditions
Economic and Market Conditions Recession has had a severe impact on retail and wholesale sales of RVs and manufactured homes Exacerbated by extremely tight credit markets and a weak real estate market © Government programs designed to help + Term Asset-Backed Securities Loan Facility (TALF) to ler f
Slide 9: Business Strategy
Business Strategy © Maximize profitabi * Market share growth * New product introductions * Strategic acquisitions * Operational efficiencies This strat accomplished thr. Outstanding customer service * Motivating management through strong profit incentives + Low cost manufacturing: > Optimizing produ
Slide 10: Content Per Towable RV
Content Per Towable RV 100% market share in existing products would yield $3,900 to $4,300 per Towable RV. 90+% of RV Segment sales are for Towable RVs ) sz088 31,902 2001 " 2002 " 2003 | 2004 | 2005 | 2006 | 2007 | 2008 LTM RV Segment a8 operating Profitmargin 8.7% 100% 11.6% 9.8% «97H = 84H 1B «78
Slide 11: Content Per Manufactured Home
Content Per Manufactured Home 100% market share in existing products would yield $4,000 to $4,400 per home Sisce S111 $1,489 $1,477 MH Segment. 2001 2002 | 2003 2004 2005» 2006 2007 2008 -LTM9I09 operating profit margin 10.8% 10.9% 10.8% 10.5% 106% 9.1% 85% 7.7% 27% ‘See Page 18 for Industry Informa
Slide 12: Acquisitions and Product Line Extension
Acquisitions and Product Line Extension (o) ® ® ® © Drew is a disciplined and patient acquirer Gain market share or add products from other suppliers through asset acquisitions Complimentary to our core RV (including specialty trailers) and MH markets Seek products or technologies that we can expand
Slide 13: New Product Introductions
New Product Introductions ACQUIRE Began Production of ‘COACH STEP: production of axles for towable RVs ‘Adding electric entry doors for steps for motor Mit homes ACQUIRE ‘COMPONENTS: Introduce RV suspension production of Primarily steel chassis be ut products entry doors for ” | 1 ' 1997 2000 2001 2
Slide 14: Supplier to Industry Leaders
Supplier to Industry Leaders Outstanding customer service and national coverage, with 27 production facilities (approximately 2.5 million sq. ft.), make us a key partner with our customers, includin: Forest River (owned by Berkshire Hathaway) Heartland Recreational Vehicles, LLC (privately owned) Ja
Slide 15: RV Market
RV Market TOWABLE RVS (90+% of Drew's RV Segment revenues) La) Slee Trovel raer Fitnwheeltoveltaler @ 88% of industry 2008 unit sales ate 1" ») © 57% of 2008 wholesale dollar sales, or $4.0 billion Travel trailer with Sport utity RV © Retail cost $4,000 to $100,000 per ‘Spondon once: =| unit. Averag
Slide 16: RVs - Industry Wholesale Shipments
RVs - Industry Wholesale Shipments 90+% of Drew's RV product sales are for Travel Trailers and 5" Wheel RVs Industry (unt in thousonds, sles in more) Drew at seve rater & 5 nea Meee 500 Fw othor tonablos $500 BS htorhomoe 1 brows RY Slor 400 $400 300 $300 200 $200 100 $100 ° so Fro}. Pro} Projection
Slide 17: Trends In RV Market
Trends In RV Market ® 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 —~+~ over 50 by 2014 i BS © Industry Advertising ; Campaign = Target Market 25 and over ® Airport securit
Slide 18: How RVs Are Used
How RVs Are Used © Shift in U.S. culture toward more RV-related activities > College and NFL football games > NASCAR events © More economical family vacations > Typical RV family vacation is less expensive ® Many RVs are “parked” over the long-term as second homes
Slide 19: MH — Industry Production
MH — Industry Production Industry oie (Units in thousands, Dotors in miions) 400 = Mutsectons = Single Section == Drews MH Sales 350 300 200 150 Fro} o (1) Management estimate.
Slide 20: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market © Cost per sq. ft. is $41 for MH vs. $93 for site-built homes © Average retail price of $65,100 for a 1,595 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 m
Slide 21: MH: Other Favorable Factors
MH: Other Favorable Factors ® ® Demand for quality, affordable housing is likely to increase Baby Boomers retiring in increasing numbers Dealer and manufacturer inventory levels are reasonable Favorable HUD code revisions
Slide 22: MH: Industry Financing Trends
MH: Industry Financing Trends ° ) i) ) ® The American Recovery Act of 2009 authorizes a tax credit of up to $8,000 for qualified first time home buyers - consideration is being given to extending this credit past its November 30, 2009 expiration. Recently passed legislation increased FHA insured cha
Slide 23: Stock Price History
Stock Price History = Drew has 22 million shares outstanding and a market capitalization of approximately $460 million as of November 4, 2009 2000 2001 2002 2003 2004 2005 20062007 10/5/07 2008 3/9/09 11/4/09 (December 31, unless noted)
Slide 24: Operating Results
Operating Results Year Ended December 31, (except as noted) FINANCIAL PERFORMANCE (Sin millions, except ES) i 2008 LT 2006 2007 2008 vs 2007 9/30/2009 Net Sales" $729 | $669 | $511 -24% $370 Operating Profit” | $55.3 | $66.0) $28.0 58% $(2.7) % of Sales 7.6% | 9.9% | 5.5% 0.7% Net Income” $31.0 | $3
Slide 25: Results By Segment
Results By Segment FINANCIAL PERFORMANCE (Sin milions) 2008 mM 12/31/06 __12/31/07__12/31/08__vs 2007 __ 9/30/09 Net sales!” RV Segment $ 508.8 $491.8 $368.1 $2728 MHSegment | $2204 | $1768 $1424 | -19% | $970 Operating Profit RV Segment $ 43.6 $ 63.1 $ 28.7 55% $9.7 MHSegment | $ 20.1 $151 $110 27%
Slide 26: Operating Results
Operating Results Three Months Ended September 30, FACIAL PERFORMANCE (Sin millions, except EPS) 2008 2009 Sales $124.3 $1217 2% Operating Profit $45 $113 150% % of Sales 3.6% 9.3% Net Income emo $ 72 | 177% Diluted EPS $0.12 $ 0.33 172% 28.
Slide 27: Operating Results
Operating Results Nine Months Ended September 30, FNANCIAL PERFORMANCE 008 Shoat Sales $433.9 $293.2 32% Operating Profit $35.0 $ 43 | 88% ‘% of Sales 8.1% 1.5% Net Income $ 209 $ 24 -88% Diluted EPS $0.95 $0.11 -88% (1), Excludes goodwit mpaiment charge (see page 35}. me
Slide 28: Results By Segment
Results By Segment Three Months Ended September 30, FINANCIAL PERFORMANCE (Sin millions) 2008 2009 Net sales RV Segment $ 85.7 $94.5 10% MH Segment!) $ 38.6 $ 27.2 29% Operating Profit RV Segment $46 $1 142% MH Segment $ 39 $ 28 ~28% Operating Profit as a Percentage of Net Sales RV Segment 5.4% 11.8
Slide 29: Results By Segment
Results By Segment Nine Months Ended September 30, FINANCIAL PERFORMANCE (Sin millions) 2008 2009 Net sales RV Segment!) $320.9 $225.6 | -30% MH Segment!) $113.0 $ 67.6 ~40% Operating Profit RV Segment $ 318 $128 | -60% MH Segment $ 11.0 $ 26 77% Operating Profit as a Percentage of Net Sales RV Segm
Slide 30: Balance Sheet
Balance Sheet FINANCIAL PERFORMANCE (si 12/31/06 12/31/07 12/31/08 9/30/09 Total assets $311 $346 $311 $289 Total debt $ 56 $ 27 $9 $- Cash & investments ST, $ 56 $9 $ 47 Stockholders’ equity $205 $252 $259 $240 RATIOS Days sales in accounts lédays | ISdays | 15days | 20 days receivable" Inventory t
Slide 31: Financial Strength
Financial Strength FINANCIAL PERFORMANCE Return on Equity 16% 17% 6% -14% Returon Assets | 9% 12% 4% “1.1% pepo io 03 0.1 0.0 0.0 pit tg 08 03 0.2 0.0 (1) EBITDA is operating profit plus depreciation, amortization and goodwill impaiment (see page 33). (2) Excludes 0 goodwill impaiment charge of $5.5
Slide 32: Analyst Coverage
Analyst Coverage Avondale Partners, LLC Bret Jordan - (617) 314-0480 CJS Securities Torin Eastburn — (914) 287-7600 Janney Montgomery Scott LLC John T. G. Rogers - (202) 955-4316 Sidoti & Company, LLC Scott Stember — (212) 453-7017 Thompson Research Group Kathryn Thompson - (615) 414-0321
Slide 33: Thank you!
Thank you! For more information contact: Fredric M. Zinn President and CEO 914-428-9098 fred@drewindustries.com Joseph S. Giordano III Chief Financial Officer 914-428-9098 joe@drewindustries.com OR VISIT OUR WEBSITE: www.drewindustries.com >
Slide 34: Reconciliation of Operating Profit to EBITDA
Reconciliation of Operating Profit to EBITDA FINANCIAL PERFORMANCE L™. (Sin millions) 2 2002 2003 2004 2005 2006 2007 2008 9/30/09 ee) $20.3 | $29.2 | $34.3 | $44.0 | $57.7 | $55.3 | $66.0 | $19.9 | $155.9) Depreciation & $8.4 | $7.3 | $78 | $93 | $120 | $15.7 | $17.6 | $17.1 | $189 Amortization Goo
Slide 35: Reconciliation of Adjusted Results to Actual
Reconciliation of Adjusted Results to Actual FINANCIAL PERFORMANCE (Sin millions) Year Ended 12/31/08 LTM Ended 9/30/09 Actual Adjust Adjusted |i) Actual | Adjust @)|| Adjusted [sales__{ssio.s| - | $510.5 | sss | Diluted EPS $0.23 | $0.76 | includes goodwil impaiment of $5.3 milion atter direct impa
Slide 36: Reconciliation of Adjusted Results to Actual
Reconciliation of Adjusted Results to Actual FINANCIAL PERFORMANCE (Sin millions) Nine Months Ended Nine Months Ended ) 9/30; Actual | Adjust) | Adjusted $293.2 |__| $293.2 | (“J includes goodwill impairment of $45.0 milion,
Slide 37: Reconciliation of Segment Results to Consolidated
Reconciliation of Segment Results to Consolidated FINANCIAL PERFORMANCE (Ss ns) 12 Months Ended Net Sales: RV Segment $ 508.8 $4918 $ 368.1 $ 2728 MH Segment 220.4 176.8 142.4 97.0 Total Net Sales $ 729.2 $ 668.6 $510.5 $369.8 Operating Profit: RV Segment $ 43.6 $ 63.1 $ 287 2.7 MH Segment 20.1 EAL
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