Lci Industries · NYSE:LCII
Lci Industries — Investor Presentation (March 2023)
31 slides from Lci Industries's investor presentation, Mar 10, 2023
Slide 1: LCI Industries Investor Presentation March 2023
LCI Industries Investor Presentation May 2022 1 LCI INDUSTRIES INVESTOR PRESENTATION March 2023
Slide 2: Forward-Looking Statements
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 objectives of manag
Slide 3: LCI at a Glance
LCI AT A GLANCE A leading supplier of highly engineered components primarily to the OEMs of RVs, buses, trailers, trucks, boats, trains, manufactured housing, and their related aftermarkets * See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most directly
Slide 4: LCI at a Glance: Diversified Operations
LCI AT A GLANCE Over the last three decades, LCI has strategically diversified operations into the RV adjacent market, aftermarket and marine industry; leaning into outdoor lifestyle movement * See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most direct
Slide 5: LCI Overview: Industry-Leading Brands and Core Competencies
LCI OVERVIEW Industry-Leading Brands and Core Competencies 7 Core Competencies Metal Fabrication & Welding Lamination Glass Fabrication Cut & Sew Power & Motion Systems Electronics Plastics Forming Applicable Across a Number of Customer Segments Recreational Vehicle Marine Transit & School Bus Eques
Slide 6: LCI Overview
LCI OVERVIEW 6 Since LCI was founded, we have always focused on the following:
Slide 7: Key Strategic Opportunities
KEY STRATEGIC OPPORTUNITIES Our long-term growth is guided by execution against four strategic pillars: 7 INNOVATION AS A CULTURE QUALITY LEADERSHIP & CULTURE CUSTOMER EXPERIENCE
Slide 8: Leadership & Culture
LEADERSHIP & CULTURE We strive to drive superior returns to all of our teams...our PEOPLE, our CUSTOMERS and our SHAREHOLDERS 8 Striving to Lead • A passion to win, coupled with a robust growth strategy, drives us to be a leader in every market we enter • Strong cultural underpinning has helped redu
Slide 9: Innovation as a Culture
INNOVATION AS A CULTURE Innovation Propelling our Differentiation Strategy Continuously developing new product innovations to meet increasing demand for technologically-advanced products 9 Independent Suspension Gate Defender Jack OneControl The Fort Temp & Propane Sensors Furrion Power Cord Set ABS
Slide 10: Leader in Customer Experience
LEADER IN CUSTOMER EXPERIENCE Curated Communities both online and in-person activations • 21,000 Consumer members in our online communities (Facebook groups + Community App) • Attending over 20 events to engage directly with Consumers, including our very own Lippert Getaway • Leverage extended follo
Slide 11: Dedication to Quality
DEDICATION TO QUALITY Reputation for safe and reliable products enabling continued market share growth • Quality of our products leads to strong customer relationships, helping us win new business and increase our market share Focus on automation to maintain quality while supporting profitability •
Slide 12: ESG Focus Areas
ESG FOCUS AREAS Driving long-term value creation through progress on ESG initiatives. Commitment to Sustainability Reducing the environmental impact in our operations • 734,169 KWh of energy generated through solar in 2022; projected to grow to 4,380 MWh per year following completion of solar projec
Slide 13: Our Business
OUR BUSINESS
Slide 14: North American RV OEM Net Sales
North American RV OEM Net Sales 2018 2019 2020 2021 2022 $0M $800M $1,600M $2,400M $3,200M Growth Drivers & Trends RV OEM 13% CAGR Key Drivers • Continue to see strong interest in the outdoor lifestyle led by peer to peer rentals and pricing advantage • North American RV OEM revenues up 17% YOY driv
Slide 15: North American Marine OEM Net Sales
North American Marine OEM Net Sales 2018 2019 2020 2021 2022 $0M $100M $200M $300M $400M $500M Growth Drivers & Trends MARINE OEM 47% CAGR Key Drivers • Benefits from secular tailwinds within the outdoor recreation space, driving heightened long-term demand • Inventories were managed efficiently in
Slide 16: Growth Drivers & Trends: Aftermarket
Growth Drivers & Trends AFTERMARKET Key Drivers • Secular outdoor recreation trends driving Aftermarket businesses forward • Represents one of the strongest value drivers for LCI due to long runway for growth, counter-cyclicality, strong margin profile, and premium brands • Innovative Furrion and Wa
Slide 17: Growth Drivers & Trends: International Business & Other Adjacencies
Growth Drivers & Trends INTERNATIONAL BUSINESS & OTHER ADJACENCIES Key Drivers • International: ◦ Experiencing different consumer demand than North American business, offering geographic diversification ◦ Demand still outpacing supply in many international regions due to supply shortages • Adjacenci
Slide 18: FY 2022 Financial Performance
Operating Margin 8.9% 10.6% 2021 2022 (in th ou sa nd s) Consolidated Net Income $287,739 $394,974 2021 2022 (in th ou sa nd s) EBITDA* $510,730 $682,240 2021 2022 FY 2022 FINANCIAL PERFORMANCE * Additional information regarding adjusted EBITDA, as well as reconciliation of this non-GAAP financial m
Slide 19: Financial Overview
Free Cash Flow* ($M) $68 $37 $211 $174 -$210 $472 2017 2018 2019 2020 2021 2022 $(250)M $0M $250M $500M EBITDA* ($M) $269 $266 $276 $321 $511 $682 2017 2018 2019 2020 2021 2022 $0M $200M $400M $600M $800M Diversification focus driving revenue and market share expansion, with effective cost managemen
Slide 20: Expanding Addressable Markets
EXPANDING ADDRESSABLE MARKETS $11 billion in combined growth opportunity through various markets as we expand our footprint and diversify offerings Unlocking value through diversification: (1) Amounts in millions. "Market Opportunity" amounts represent Management's estimate of the size of the addres
Slide 21: Growth Strategy
GROWTH STRATEGY Allocating capital towards diversification and expanding market share Allocating Capital to Areas with the Highest Growth Return • Investment in the business, with focus on automation projects • Reduce leverage • Return capital to shareholders • Execute strategic acquisitions Continu
Slide 22: Strong Balance Sheet & Financial Flexibility
Strong Balance Sheet & Financial Flexibility FINANCIAL OVERVIEW Healthy balance sheet with ample liquidity enables execution of strategic priorities Fourth Quarter 2022 Fourth Quarter 2021 Cash and Cash Equivalents $47M $63M Remaining Availability under Revolving Credit Facility $307M $168M Net Debt
Slide 23: Capital Deployment Strategy
Capital Deployment Strategy FINANCIAL OVERVIEW Reduce leverage Disciplined reinvestment to drive growth Acquisitions that align to strategy and financial targets Return capital to shareholders Attractive dividend yield Opportunistic share repurchases Target net debt / EBITDA leverage of 1.0x to 1.5x
Slide 24: Acquisition Strategy
Over 50 acquisitions in the last 20 years • Majority of last 20 acquisitions focused outside of North American RV industry Looking for: • Great leadership • Product innovation • Consistency with our core manufacturing disciplines • Niche markets • Favorable competitive landscape Typical synergies to
Slide 25: Appendix
APPENDIX
Slide 26: Consolidated Financials
Consolidated Financials APPENDIX ($ in millions except per share data) 2016 2017 2018 2019 2020 2021 2022 Net Sales $ 1,679 $ 2,148 $ 2,476 $ 2,371 $ 2,796 $ 4,473 $ 5,207 Operating Profit $ 201 $ 214 $ 199 $ 200 $ 223 $ 398 $ 553 % of Sales 12.0% 10.0% 8.0% 8.4% 8.0% 8.9% 10.6% Net Income $ 130 $ 1
Slide 27: Balance Sheet
Balance Sheet APPENDIX *Debt increase in 2019, 2020, and 2021 due to funding recent acquisitions and liquidity for COVID-19 shutdowns. ($ in millions) 2016 2017 2018 2019 2020 2021 2022 Cash & Equivalents $ 86 $ 26 $ 15 $ 35 $ 52 $ 63 $ 47 Accounts Receivable 57 82 122 200 269 320 214 Inventory 189
Slide 28: EBITDA Reconciliation of Non-GAAP Measures
EBITDA Reconciliation of Non-GAAP Measures APPENDIX EBITDA is a non-GAAP performance measure included to illustrate and improve comparability of its results from period to period. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization e
Slide 29: Leverage Ratio (Net Debt to EBITDA) Reconciliation
Leverage ratio (net debt to EBITDA) Reconciliation of Non-GAAP Measures APPENDIX The Leverage Ratio (or Net Debt to EBITDA ratio) is a non-GAAP measure of the use of debt. The Leverage Ratio is calculated by dividing the total of long-term indebtedness, plus current portion of long-term debt, less c
Slide 30: Free Cash Flow Reconciliation of Non-GAAP Measures
Free cash flow Reconciliation of Non-GAAP Measures APPENDIX Free cash flow is a non-GAAP measure of liquidity, calculated by subtracting capital expenditures from net cash flows provided by operating activities. The Company considers free cash flow to be a profitability and liquidity measure that pr
Slide 31: Industry Statistics Summary
APPENDIX Lclindustries Industry Statistics Summary TOTAL RECREATIONAL VEHICLES (RV) yora_)|_f Wholesale Units ™ 1 Retail Units ™ 1S Dealer Inventory Impact Tenth YD. Tm Tenth YD. TM Tenth YID. uw, Bec ‘aeaor 0% Boazi0 35% 600.240 24800 1% Beara oe B69, 48 16.007 30480" 53676 Janz 33351 16% 53.351 16