Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (May 2016)
44 slides from Lci Industries's investor presentation, May 10, 2016
Slide 1: Your Journey Begins Here
YOUR JOURNEY BEGINS HERE © drewindustries.com lippertcomponents.com
Slide 2: 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 management, markets for the Comp
Slide 3: Management Team
JASON LIPPERT, CEO > 20+ years with Drew prew INDUSTRIES INCORPORATED SCOTT MERENESS, PRESIDENT > 20+ years with Drew Management Team DAVID SMITH, CFO > Average tenure of Drew’s members of senior managementis 14+ years with the company
Slide 4: Financial Performance
Financial Performance Net Sales = RV Segmentnet sales MH Segmentnet sales = EBITDA EBITDA $1,600 i, Net Sales and EBITDA ") (in mitions) $1,400 $1,200 $1,000 $901 $800 $729 i $669 $669 2 t N 3 $ $80 B FT f $60 $400 $325 $354 t $255 oe rs + $40 iH a wa See cGsRsSOseeie See ee oe Ee re eo i Ed B/S) 3)
Slide 5: Net sales by segment
i(S in millions, RV Towable : $653 $844 $728 Manufactured Housing $77 $80 $80 $77 $82 $85 Total $681 $901 $1,016 $1,191 $1,403 $1,464 | Yearoveryeargrowih 19% 32% 13% 17%) 18% 8% LTM.2016 percentage growth is compared to 2014
Slide 6: Sales growth 2010 to 2015
Sales for the year ended December 31, 2010 compared to the year ended December 31, 2015. Both periods exclude the Company's net sales of components for Towable eee omco VS, which made up 75% and 67% of consolidated net sales, respectively.
Slide 7: Sales growth: acquisitions, organic and industry
1) Sales for acquistions represent the traling hveWe month sales at the date of acquistion. Any post-acquistion change is included in organic orindustry accordingly. ) Organic growth consists primary of gains in market share, price increases, increased adjacent industry sales and new product sales.
Slide 8: RV and Manufactured Housing Industries
RV and Manufactured Housing Industries
Slide 9: RVs - Industry Wholesale Shipments
RVs - Industry Wholesale Shipments (Compared to Drew’s Performance) ingustY Approximately 72% of Drew’s RV Segment net sales are for Travel Trailer and 5 Wheel RVS yor euies 800 $1,600 (industry units in thousands, net sales in millions) == Motorhomes 1) + $1,400 Other Towables $1342 an Travel Trail
Slide 10: RV Wholesale Shipments
RV Wholesale Shipments g a RV Shipments g e RV Shipments vs Federal & oa ‘ Be \ Interest Sian = Eon E 00 & Le ia! AN é 2 200 Noi 2 200 | m 10 150 x SF SF PS és. #* »° - O% 5 450 if 150 0% ' A. ne ‘ so Ti aN ‘ us ae z 1 aN | AS i poe 108 py A ANNE NOS fe =~ __* ees Ma I N 150 V4 50 a x \\ 10 _—_RV Sh
Slide 11: Product range
ad » eS FURRION Doors APPLIANCES awnings @ tes FURNITURE ES ELECTRONICS a a ~ FURRION ~~ ) ELECTRONICS °, winpows ‘SHOWERS: & SINKS ‘SLIDE-OUTS ma *s é ‘SUSPENSION =¥ Ef ENHANCEMENTS AXLES. LEVELING lippertcomponents.com -10-
Slide 12: Manufacturing capabilities
Fabric and Electronics and Steel and Lamination Steel and Motion- Woodworking Plastic Forming Aluminum and Glass Aluminum Systems Fabrication Fabrication Welding
Slide 13: Towable RVs and Motorhomes
Towable RVs (Approximately 72% of Drew's RV Segmentnet sales) _o— Motorhomes (Approximately 7% of Drew's RV Segmentnet sales) prew of industry 2015 unit sales of 2014 wholesale dollar sales, or $9.4 billion Retail cost $4,000 to $100,000+ per unit. Average about $30,000 of industry 2015 unit sales o
Slide 14: Campers in the U.S.
(EE™ 5A,, ii Tent Campers _ Aim 25.0 milion w i] 14... i \21% } Active Campers . — RV Campers ys 46.2 million- WS 9.7 million —~\21% = Cabin Campers = 9.7 million = * Estimates based on 108 million households. All other (4%) 1.8 milion. 59x, Camp Every Year 27.4 million 11% Camp Every Other Year 48
Slide 15: RV lifestyle and demographic trends
+ Typical RV family vacation is 23 to 59 percentless expensive for a family of four The number of consumers between the ages of 55 and 70 is projected to total 56 million by 2020 Generation X and Millennials are a source of industry growth mainly in the entry- level market College and NFL football g
Slide 16: RV Industry Trends
RV Industry Trends Units Travel Trailer and 5 Wheel RVs, Drew’s primary RV market 325 314.4316.5 Wholesale mm Retail 300 (Units in thousands) a89 Be — 277.0 ae pare) 250.8 228.4 ie 2129 222.8 Abe 208.0 200 i185) 186.0 175 164.3 150 138.3 125 100 ete 90.7 ® 65.1 58.8 50 25 0” 2008 2009 2010 2011 2012
Slide 17: Number of U.S. Households that Own an RV
Number of U.S. Households that Own an RV (in Millions) 10 6 | i Z a = : we L 1980 1984 1988 1993 1997 2001 2005 2011 Statistics provided by RV Consumer Demographic Profile — 2011
Slide 18: Demographics
Demographics Number of U.S. households that own an RV 7.9 million 8.9 million Household ownership rates of RVs 80% 85% Average age of all RVs 12.7 years 14.2years Average time consumers have owned their 6.6 years 8.4 years current RV Age of typical RV owner A9 years A8 years Average income of RV own
Slide 19: Manufactured Housing - Industry Production
Manufactured Housing — Industry Production (Compared to Drew's Performance) Industry — a Drew’s Gait (Industry unitsin thousands, net sales in millions} Re cae _ Multi-Sections == Single-Section Drew's MH Segment 250 net sales $250 $221 $920 200 + 193 $200 ore $177 160 $142 $150 111 9170 $122 $116 6
Slide 20: What's Next...
What’s Next... International RV Innovation/RD +. Aftermarket RV + Adjacent Markets - Acquisitions + Additional North American RV Growth/Content
Slide 21: International RV Markets
| International RV Markets
Slide 22: Research and Development
Slide 23: RV Aftermarket Opportunity
Slide 24: Marine, Bus, Truck, Fleet, Cargo
Marine Bus Truck Fleet Cargo
Slide 25: Acquisitions by year
2016 2015 2013 2014
Slide 26: Recent acquisitions
EA Technologies 92. 3 WW Sree oose coatingservices ‘Manufacturer of furniture solutions for fresh water Signature Seating” boat manufacturers, primarily pontoon boats Flair Interiors Manufacturer of RV furniture and mattresses (1) Plus contingent consideration payable based on future sales.
Slide 27: Acquisition Discipline and History
Acquisition Discipline and History Have made nearly 40 acquisitions over the past 16 years Weare experienced at successfully integrating acquisitions Acquisitions have come in the form of intellectual property, small start ups and larger businesses 7 out of last 10 acquisitions have had substantial
Slide 28: RV Content
RV Content $1,460 (1) Amounts (in millions) represent Management's estimate of the size of the addressable market, excluding the Company’s current net sales to those markets. 2 (2) Furtion includes products to be released during 2016 and 2017.
Slide 29: Expanding Our Growth Potential
Expanding Our Growth Potential Chassis and Axles 120 Ee es) Adjacent: Axles 400 Se Marine Furniture 115 CE International 715, (1) Amounts (in millions) represent Management's estimate of the size of the addressable market, excluding the Company’s current net sales to those markets. =28- (2) Furtion
Slide 30: Additional growth opportunities emanating from our core
Additional growth opportunities emanating from our core POTENTIAL SOURCES OF GROWIH Capabilities Core Industries: Business é Core of 2 Extensions % Adjacencies Core extensions vary on one dimension from existing core business and can be managed within the existing operating model Lowest execution ri
Slide 31: Content Per New Towable RV
Content Per New Towable RV + Approximately 72% of RV Segment net sales are for Travel Trailer and Fifth-Wheel RVs + 100% market share in existing products would so yield an estimated $7,400 per Towable RV Eek $2,987 ceo? $2,816 mm + Growth in RV “features” drives content ent $2,690 $2,713 increases
Slide 32: Content Per New Motorhome RV
Content Per New Motorhome RV + Approximately 7% of RV Segment $1,810 net sales are for Motorhome RVs. eo noe” $1,602 * 100% market share in existing eee products would yield an estimated ne 6,000 per Motorhome RV xen $6, per Motorhome = co $1,227 $1,272 2 wel y00ee ome ee w 9 io) = Qo oO $669 & S °
Slide 33: Supplemental Schedules
Supplemental Schedules
Slide 34: Operating Results
Operating Results Three Months Ended March 31 FINANCIAL PERFORMANCE ig ions, except EPS) 2016 Net Sales $ 422.8 Operating Profit $2 S517 % of Sales 13.2% Net Income $ 36.0 Diluted EPS $ 1.45 2015 Change $ 361.5 17% $ 31.8 75% 8.8% $ 20.1 79% $ 0.82 77h
Slide 35: MH Segment / RV Segment
MH Segment RV Segment
Slide 36: Debt Position
Debt Position FINANCIAL PERFORMANCE Cash and Net Cash eae (Sin millions) Investments (Debt) the Period 12/31/11 $ - $ 7 $ 7 $ 50 12/31/12 - 100) 100) 1 12/31/13 - 66 66 5 12/31/14 16 - (16)2) 107 12/31/15 50 12 (38)®) 4) 03/31/16 $ 50 $ 28 $ (22)(4 $ 3715) (1) On December 20, 2012, the Company paid
Slide 37: Balance Sheets
Balance Sheets FINANCIAL PERFORMANCE ($ in mi Nn: 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 @Q1 2016 Total Assets So Sol $e S745 be 453, $ 544 $ 623 $ 709 Total Debt $ a) a) 7 $ 16 §$ 50 $ 50 Cash & Investments $ TA \\les 104) $ 66 $ - $§$ 12S 28 Stockholders’ Equity $ 277 $ 2848 $ 31414 $ 395 $
Slide 38: Cash Flow
Cash Flow FINANCIAL PERFORMANCE Significant use of cash items since December 31, 2009 Acquisitions (23) $281 million Capital expenditures 177 million Dividends 180 million Stock repurchases 2 million Total $ 640 million prew (1) Includes 2016 YTD acquisitions totaling $36.9 million, which includes C
Slide 39: Operating cash flow from 2009 to present
. FINANCIAL PERFORMANCE well co $32 | $33 $29 Operating cash flow from 2009 fo present [$ in millions} [1] Cash dividend of $2.00 per share, or $47 million, declared in December 2013 and paid in January 2014. [2] Includes subsequent cash dividend of $0.30 per share, or $7 million, paid in April 2016
Slide 40: Financial Strength
Financial Strength FINANCIAL PERFORMANCE (12 months ended) 12/31/11 12/31/12 12/31/13, 12/31/14 12/31/15 03/31/16 Return on Equity 11% 13% 16% 17% 18% 22% Retum on Assets 9% 10% 12% 12% 12% 14% Total Debt to Equity 0.00 0.00 0.00 0.04 0.11 O11 Total Debt to EBITDA") 0.00 0.00 0.00 0.12 0.32 0.29 (1)
Slide 41: Reconciliation of Operating Profit to EBITDA
Reconciliation of Operating Profit to EBITDA FINANC! RFORMANCE $203 | $202 || $343 | $40 $577 | $553 | $060 | $199 ($35.6) $454 | $uBs $581 | $78 goss | $1162 | $1401 $4 $73 978 $3 $120 $157 $175 $171 $18s S17, 257 we ses $- $- $- $- $- oe $- $55 $450 $- $- $- $- $- £- $- EanDA $7 GES $421 $59 $07 G
Slide 42: Net Sales and Operating Profit by Segment
Net Sal RV Segment $ 6 $ 780.9 $ 893.7 §$ MH Segment Operating Profit: RV Segment $ 37.7 §$ $ 68.2." $ 86.6 §$ 07.5 $ MH Segment 10.8 119 10.8 125 Severance 5 = 5 = (3.7) Executive Succession = (1.5) (1.9) a - 7 -Al-
Slide 43: Stock Price History
Stock Price History Drew has 24.5 million shares outstanding and a market capitalization of approximately $1.6 billion as of April 29, 2016 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 4/29/16 + Datesnoted above are as of December 31, unless noted. + Stock prices above
Slide 44: Analyst Coverage
Analyst Coverage a” Citi Research > Gregory Badishkanian — (212) 816-2720 a CJS Securities > Dan Moore — (914) 287-7600 a CL King & Associates > Scott Stember — (212) 364-1806 ” Sidoti & Company > Tristan Thomas — (212) 453-7019 ” Thompson Research Group > Kathryn Thompson — (615) 891-6206