Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (May 2014)
47 slides from Lci Industries's investor presentation, May 7, 2014
Slide 1: Drew Industries Incorporated
Drew Industries Incorporated (NYSE: DW) A Leading National Supplier of a Wide Variety of Components for RVs and Manufactured Homes
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain “forwarcllooking statements" with respect to our financial condition, results of operations, business strategies, operating efficiencies or synergies, competive position, growth opportunities, ‘acauistions, plans and objectives of managem
Slide 3: Section I: Overview
SECTION | Overview
Slide 4: Drew's Segments — LTM 3/2014
Drew's Segments — LTM 3/2014 Net Sales - $1,048 million MH = $119 million RV = $929 million 89% Segment Operating Profit - $91 million ‘MH = $11 million RV = $80 million 87%
Slide 5: Drew's Products — Components
Drew's Products — Components for RVs and Manufactured Homes Net Sales of $1,048 Million for the 12 Months Ended March 31, 2014 RV Furniture and Mattresses: $109 million RV Chassis, sand (Other Chassis Parts $508 million $38 million Other Products: 966 million ‘$75 million RV Segment Windows ‘and Doo
Slide 6: Financial Performance
Financial Performance Net Sales and EBITDA ") (in mittions) Net Sales m= RV Segment net sales=== MH Segment net sales == EBITDA EBITDA $1,200 $120 $1,048. 6 $105 $1,000 $90 $800 $75 $600 $60 $45 $400 $30 $200 $15 $120] $0 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM 3/14 (
Slide 7: Management Team
Management Team ® Jason Lippert, CEO > 15+ years with Drew © Scott Mereness, President > 15+ years with Drew ® Joe Giordano, CFO & Treasurer > 10+ years with Drew
Slide 8: Section II: RV Industry
SECTION II RV Industry
Slide 9: RV Market
RV Market TOWABLE RVS (Approximately 817 of Drew's RV Segment net sales) Travel raier Fith.whee! travel trailer 88% of industry 2013 unit sales 66% of 2012 wholesale dollar sales, or $7.0 billion Travel trailer with, Spor utity RV Retail cost $4,000 to $100,000 per expandable ends . “Toy Hauler" uni
Slide 10: Why We are Optimistic
Why We are Optimistic ® More economical family vacations > Typical RV family vacation is 23 to 59 percent less expensive for a family of four ® Shift in U.S. culture toward more RV-related activities > College and NFL football games > NASCAR events >» More active, shorter, “greener”, & family orient
Slide 11: RVs - Industry Wholesale Shipments
RVs - Industry Wholesale Shipments Approximately 61% of Drew's RV Segment net sales are for Travel Traller and 5" Wheel RVs Industry Units 500 (industry units in thousands) BNotorhomes ‘mother Towables ‘400 Travel Trailers & 5th Wheels 354 391 370 300 237 200 oo + ™ 7 ° Projections for 2014 are the
Slide 12: RV Industry Trends
RV Industry Trends — Travel Traller and 5" Wheel RVs, Drew's primary RV market 300 [Unis in thovsanes) 2 fm Wholesale mm Retail 265.9 53.4 pa 2129 el 222.8 zs 2129 to02 6.0 200 29, 126.0 ws 1643 490 138. 128 4100 7 7733 30 ae 2 ° 2008 2009 «201020812012 2013 Mar YTD'13 Mar YTD “14 Desler inventory (
Slide 13: Demographics
Demographics [RV ConsuMER DEMOGRAPHIC PROFILE - 2011) hantsiomemipninas | aak | 8SR Average time consumers have ow (KE Average income of RV 7a $75,000 ‘Seven-in-ten RV owners plan to purchase another RV to replace their current unit, with 37% of these ‘expecting to purchase a new RV. Current owners
Slide 14: Section III: Our RV Segment
SECTION III Our RV Segment
Slide 15: RVs - Industry Wholesale Shipments (Compared to Drew's Performance)
RVs - Industry Wholesale Shipments (Compared to Drew's Performance) Industry Approximately 61% of Drew’s RV Segment net sales are for Travel Traller and 5" Wheel RVs Drew's Units. Net Sales = (Industry units in thousands, net sales in millions) $929 4 600 Shlotornomes 100 mother Towables 00 sm Trave
Slide 16: Content Per New Towable RV
Content Per New Towable RV - Approximately 81% of RV Segment net sales are for Travel Trailer and Fifth-Wheel RVs - 100% market share in existing products would yield an estimated $5,000 per Towable RV - Growth in RV “features” drives content increases $2,690 92.716 $2,731 2001 2002 2003 2004 2005 2
Slide 17: Content Per New Motorhome RV
Content Per New Motorhome RV - Approximately 6% of RV Segment net sales are for Motorized RVs - 100% market share in existing products would yield an estimated $5,000 per Motorized RV $1,227 $1,252 $1,256 2004 §=2005 2006 2007 2008 #2009 «+2010 = # 2011 2012) = 2013 LIM 3/14 RV Segment operating pro
Slide 18: RV Segment Net Sales by Type
RV Segment Net Sales by Type LTM 3/14- $929 Million $95 million $27 million 10% LTM 3/13- $809 Million $79 million $21 million 10% $38 million, 2% 5% mTravel Trailer & Fifth-Wheel - OEM =| Motorhome - OEM mw Aftermarket m Adjacent Industries
Slide 19: Section IV: Manufactured Housing Industry
SECTION IV Manufactured Housing Industry
Slide 20: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market © Cost per sq. ft. is $41 for MH vs. $83 for site-built homes ® Average retail price of $60,600 for a 1,470 sq. ft. MH ® 9 million manufactured homes across the U.S. ® Improved quality, appearance and safety ® Studies have shown MHs built since 1995 sustain no more d
Slide 21: Manufactured Housing — Industry Production
Manufactured Housing — Industry Production errand {industry units in thousands) 20 — Mut-sectins <= single-Section of 0 ‘001 2002” 2003 ~ 2008” 2005” 2006” 2007 ” 2008 ” 2009” 2010” 2011 2012” 2013” LTM ‘There are no industy forecasts for the manufactured housing industry
Slide 22: MH: Favorable Factors
MH: Favorable Factors INDUSTRY: ® Demand —Demand for quality, affordable housing is likely to increase —Baby boomers retiring in increasing numbers —Dealer and manufacturer inventory levels are reasonable —Availability of financing is still an issue, as is the weak overall housing market DREW: ® Dre
Slide 23: Section V: Our Manufactured Housing Segment
SECTION V Our Manufactured Housing Segment
Slide 24: Manufactured Housing — Industry Production (Compared to Drew's Performance)
Manufactured Housing — Industry Production (Compared to Drew's Performance) Industry Drew's esis {industry units in thousands, net sales in milions) Net Sates oo = Mult-sections == Single-Section =e Drew's MH net sales pam S22 s220 $25 199 200 $183 $17 s200 108 S175 154 150 nf in © $142 s1s0 134 $12
Slide 25: Content Per New Manufactured Home
Content Per New Manufactured Home - 100% market share in existing products would yield an estimated $4,500 per home - Affordability of the homes constrains content growth $1,666 3 $1,450 $1,429 $1483 $1,465 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM 3/14 Sectionsperhome 1.7
Slide 26: MH Segment Net Sales by Type
MH Segment Net Sales by Type LTM 3/14- $119 Million LTM 3/13 - $121 Million
Slide 27: Section VI: Strategy
SECTION VI Strategy
Slide 28: Business Strategy
Business Strategy = New product introductions = Market share growth = Operational efficiencies = Diversification to related industries = Strategic acquisitions © This strategy accomplished through * Outstanding customer service + Motivating management through strong profit incentives + Low cost manu
Slide 29: Expanding Our Growth Potential
Expanding Our Growth Potential Est. Total Opportunities Market 2011 ~ Doors and Windows for Truck Caps, Horse Trailers and Buses [zo Soest epaceent Parse HoiNonet International During the third quarter of 2013, the Company hired a new Director of International Business Development, who will spend ti
Slide 30: Acquisition Criteria
Acquisition Criteria ® Drew is a disciplined and patient acquirer ® Gain market share or add products from other suppliers through acquisitions ® Seek products or technologies that we can expand through our nationwide customer base and factory network ® Become an even more extensive supplier to our
Slide 31: New Products and Acquisitions
New Products and Acquisitions ACQUIRE TRAIL AIR: Adding RV suspension Began production of entty doors for RVs products ACQUIRE COACH STEP: Adding electric steps for motorhomes ACQUIRE HAPPUAC Adding patented bed Its for RVs ACQUIRE EXTREME ENGINEERING: Expanding specialty traller product line Began
Slide 32: New Products and Acquisitions
New Products and Acquisitions ‘ACQUIRE ‘ACQUIRE M&M. MsTATEs: FABRICATORS: ‘Adding Too! & Expanding chassis Die and customization operation automation capabilities ‘ACQUIRE M-TEC: ‘Adding ‘components for RVs and mobile office units JAcauE EA ; Inroduce reesnotocies Inkoduce “OBICN: RVLOCK remote Exp
Slide 33: 2012 — 2014 Acquisitions
2012 — 2014 Acquisitions Purchase Historical ($ in millions) Price Sales Description Sal paren) (1) Plus contingent consideration payable on future sales.
Slide 34: Section VII: Operating Results
SECTION VII Operating Results
Slide 35: Operating Results
Operating Results Three Months Ended March 31, FINANCIAL PERFORMANCE (S in millions, except EPS) 20131 2014 Change loperina rem | $7] $2607 | Net Income $162! 78% (1) Excludes executive succession. Actual 2013 operating profit was $13.6M which is 5.4% of sales. Actual 2013 net income was $8.4M, or d
Slide 36: Results By Segment
Results By Segment Three Months Ended March 3 FINANCIAL PERFORMANCE 2013 2014 Change RV Segment $ 224.0| $ 259.0 16% Operating Profit: MH Segment $ 25/ $ 23| (8%) RV Segment 5.5% 9.2%
Slide 37: Debt Position
Debt Position FINANCIAL PERFORMANCE Cash Utilized for Acquisitions Cash and Net Cash During the YTD Investments (Debt) i 12/31/11 1231/12. | i 12/31/13 | $ - $ 66 $66 $ “03/31/14 | i (1) On December 28, 2010, the Company paid a special dividend of $1.50 per share of the ‘Company's Common Stock, or a
Slide 38: Balance Sheets
Balance Sheets FINANCIAL PERFORMANCE 12/31/10 12/31/11 12/31/12 12/31/13 03/31/14 $ 307 $2 S51 NS S74 $453 [$477 Total Debt $ = |$ - |$ aaicme ss |$ 10 Cash & $ 440) 1 $ 7 NS Oe $66 1g 6t5) Investments eee i Stockholders’ $ 2439 |$ 277 |$ 2844 |$ 3145) |$ 33805) Equity RATIOS eee aa Days Sales in 13
Slide 39: Cash Flow
Cash Flow FINANCIAL PERFORMANCE Significant use of cash items since December 31, 2009
Slide 40: Cash Flow
Cash Flow FINANCIAL PERFORMANCE dividends cope $120 7 gem cxiitions mesa Repurchases eOperating Cath Flow 100 ‘010 ‘aon 2012 20131) 2014 YTD 2) Cumulative operating cash flow from 2009 fo present fn milions) (1) Cash dividend of $2.00 per share, or $47 milion, deciored in December 2013 and paid in J
Slide 41: Financial Strength
Financial Strength FINANCIAL PERFORMANCE (12 months ended) 12/31/10 1 2 12/31/13 _ 03, Total Debt to EBITDA" [ [900 | ome (1) EBITDA is operating profit plus depreciation, amortization and goodwill impairment (see page 44).
Slide 42: The Future
The Future © ®® 6 @ Increasing RV content RV industry growth Demographic tailwind Expanding into adjacent industries Affordable housing recovery
Slide 43: Stock Price History
Stock Price History = Drew has 23.6 million shares outstanding and a market capitalization of approximately $1.19 billion as of May 2, 2014 2001 2002 2003 2004 2005 2006 10/5/07 2007 2008 3/9/09 2009 2010 2011 2012 2013 5/2/14 (December 31, unless noted) 2
Slide 44: Analyst Coverage
Analyst Coverage Citi Research Gregory Badishkanian — (212) 816-2720 CJS Securities Dan Moore — (914) 287-7600 Sidoti & Company, LLC Scott Stember — (212) 453-7017 Thompson Research Group Kathryn Thompson — (615) 891-6206
Slide 45: Thank you!
Thank you! For more information contact: Jason D. Lippert Chief Executive Officer 574-535-1125 JasonL@lcit.com Joseph S. Giordano Ill CFO & Treasurer 574-535-1125 joe@drewindustries.com OR VISIT OUR WEBSITE: www.drewindustries.com > 4 a“
Slide 46: Reconciliation of Operating Profit to EBITDA
Reconciliation of Operating Profit to EBITDA FINANCIAL PERFORMANCE um 2013 3/14
Slide 47: Reconciliation of Segment Results to Consolidated
Reconciliation of Segment Results to Consolidated FINANCIAL PERFORMANCE (Sin millions) Net Sales: RV Segment MH Segment Operating Profit: RV Segment MH Segment Executive Succession