Lci Industries · NYSE:LCII
Lci Industries — Investor Presentation (May 2020)
39 slides from Lci Industries's investor presentation, May 12, 2020
Slide 1: LCI Industries Investor Presentation May 2020
LCI INDUSTRIES LCI Industries Investor Presentation May 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: COVID-19 Response
LCI INDUSTRIES COVID-19 Response Taking steps to ensure the safety of team members and manage costs as we confront challenges brought on by COVID-19 Health and Safety Measures Cost Management Measures Resuming Production ◦ Temporarily suspended production at ◦ Reduced base salaries of CEO Jason ◦ Re
Slide 4: LCI at a Glance
LCI INDUSTRIES LCI at a Glance A leading supplier of highly engineered First Quarter 2020 components to the OEMs of recreational vehicles, Key Metrics buses, trailers, trucks, boats, trains, and manufactured housing and their related aftermarkets. $659.7M $1.31 IN NET SALES ADJUSTED EPS* 7% $75.1M O
Slide 5: Investment Case
LCI INDUSTRIES Investment Case Leading market share with unmatched depth and breadth of products Strong track record of financial performance Deep culture rooted in innovation, technology, and operational excellence Compelling industry tailwinds, including high-margin growing aftermarket, robust mil
Slide 6: Business Overview
LCI INDUSTRIES Business Overview Applicable across a number With 7 core of customer segments competencies LCI serves 3 critical Recreational Metal Fabrication Vehicle customer needs & Welding High Variation / Small batch Marine Short Runs at manufacturing with Lamination Transit & School Scale the b
Slide 7: Vision and Values
LCI INDUSTRIES Vision and Values To be a leading supplier for component parts manufacturing in the segments in which we compete • Our passion to win, coupled with a robust growth strategy, drive us to LCI Leadership be a leader in every market we enter • We believe our industry-leading innovation, t
Slide 8: Breadth and Depth of Product Offerings
LCI INDUSTRIES Breadth and Depth of Product Offerings Product Lines Industries • Towable RV Chassis • Steps • RV • Heavy & Light Truck • Furniture • Leveling Systems • Aftermarket • Manufactured Homes • Windows and Windshields • Suspension • Marine • Modular Housing • Entry and Baggage Doors Enhance
Slide 9: Financial Performance
LCI INDUSTRIES Sales Trend ($M) EBITDA* ($M) 2,476 13% CAGR 2,374 2,439 14% CAGR 269 266 273 276 2,148 247 1,679 1,403 158 Financial 1,191 128 Performance 2014 2015 2016 2017 2018 2019 LTMQ120 2014 2015 2016 2017 2018 2019 LTMQ120 Diluted EPS, Adjusted in 2017 - 2020 • Q1 2020 net sales up 11%, Free
Slide 10: Culture of Innovation and Technology
LCI INDUSTRIES Culture of Innovation and Technology • Invested over $14 million in 2019 development, engineering, and product testing • Enhancing safety and quality through lean production and automation initiatives, including our new $30 million I-beam facility • Patent protected technology; over 3
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 2019 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 of
Slide 15: Positioned to Capitalize on Industry Tailwinds
LCI INDUSTRIES Positioned to Capitalize on Industry Tailwinds 2019 SALES BY END MARKET RV MARKET SHARE BY AGE 25-34 35-44 45-54 N.A. RV 55-64 65-74 75+ 30% Outdoor recreation International industry North American 20% Aftermarket Outdoor$734 Recreation billion Industry 10% Adjacent Markets * $734 bil
Slide 16: Industry Trends
LCI INDUSTRIES Industry Trends RV Wholesale/Retail/Inventory Change Industry vs Consumer Confidence 200,000 60,000 900,000 200 175,000 800,000 175 40,000 700,000 150,000 150 600,000 125,000 20,000 125 500,000 100 100,000 — 400,000 75 75,000 300,000 (20,000) 50 50,000 200,000 100,000 25 25,000 (40,00
Slide 17: Recent Events
LCI INDUSTRIES Recent Events • Acquired CURT, a leading aftermarket manufacturer of branded towing products and truck accessories • Purchase price of $338M, net of cash acquired, with 2019 sales of approximately $263M • Immediately accretive to growth, profit margins and EPS CURT Group • Advances LC
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: Q1 2020 Financial Performance
LCI INDUSTRIES Consolidated Net Sales by Market Q1 2020 Financial Performance (5)% Consolidated Net Sales Operating Margin RV OEM (in thousands) $592,172 $659,670 8.1% 6.7% +10% First Quarter 2019 First Quarter 2020 First Quarter 2019 First Quarter 2020 ADJACENT OEM Consolidated Net Income Adjusted
Slide 26: Consolidated Financials
LCI INDUSTRIES Consolidated Financials ($ in millions except per share data) 2014 2015 2016 2017 2018 2019 Net Sales $ 1,191 $ 1,403 $ 1,679 $ 2,148 $ 2,476 $ 2,371 • Five-year sales CAGR of 15% Operating Profit $ 96 $ 116 $ 201 $ 214 $ 199 $ 200 • Operating Profit more than % of sales 8.1 % 8.3 % 1
Slide 27: OEM Segment Key Drivers
LCI INDUSTRIES OEM Segment Key Drivers $ in millions 2014 2015 2016 2017 2018 2019 • Continued long-term growth in RV Wholesale Sales $ 1,127 $ 1,300 $ 1,548 $ 1,977 $ 2,243 $ 2,092 shipments with recent temporary correction of Operating $ 89 $ 105 $ 181 $ 190 $ 167 $ 165 Profit dealer inventories %
Slide 28: OEM Content Per Vehicle
LCI INDUSTRIES OEM Content Per Vehicle New Towable RV Content per New Towable RV $3,230 $3,346 $3,354 $2,987 $3,022 $3,106 • Approximately 61% 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 Key Drivers
LCI INDUSTRIES Aftermarket Segment Key Drivers $ in millions 2014 2015 2016 2017 2018 2019* • Robust Aftermarket is estimated to be double the Sales $ 64 $ 103 $ 131 $ 171 $ 233 $ 279 size of the new RV market each year with higher Operating Profit $ 9 $ 15 $ 20 $ 24 $ 31 $ 35 margins % of Sales 14.
Slide 30: Balance Sheet Supports Growth
LCI INDUSTRIES Balance Sheet Supports Growth $ in millions 2014 2015 2016 2017 2018 2019 Q120 Cash & Equivalents $ — $ 12 $ 86 $ 26 $ 15 $ 35 $ 98 Accounts Receivable 38 42 57 82 122 200 281 Inventory 132 171 189 275 341 394 351 Other Assets 374 398 455 563 766 1,234 1,321 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* 269.50 3.06 2.41 261.70 2.16 156.61 1.05 0.82 155.08 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 Three Months Ended March 31, 2020 2019 (In thousands) Net income $ 28,214 $ 34,366 Interest expense, net 5,197 2,507 Provision for income taxes 10,855 10,882 Depreciation expense 15,200 12,579 Amortization expense 9,414 5,870 EBITDA
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 Three Months Ended March 31, 2020 2019 (In thousands, except per share amounts) Net income $ 28,214 $ 34,366 Non-cash charge for inventory fair value step-up 6,243 — Income tax imp
Slide 36: Reconciliation of Non-GAAP Measures: Adjusted Net Income and 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 Q120 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 Q120 Net cash flows provided by operating activities $ 107.0 $ 95.0 $ 203.4 $ 155.1 $ 156.6 $ 269.5 $ 261.7 Less: Capital expenditures 42.5 29.0 44.7 87.2 119.8 58.2 41.7 Free cash flow
Slide 39: Industry Statistics Summary
® LCI INDUSTRIES LCI Industries Industry Statistics Summary TOTAL RECREATIONAL VEHICLES (RV) Dealer Inventory Impact, Month: Io. Ti 483,780 487,128 a 467,020 i 3.999 5%, r 73.547 11,106 (6.846) 7.280 x a746tt 116,370) 15,110 428,741 247,236 467,405 (15,565) -30.675 420,341 28,133 485,054 (2,797) 53.