Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (November 2013)
47 slides from Lci Industries's investor presentation, Nov 12, 2013
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 “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive posi
Slide 3: Section I: Overview
SECTION | Overview
Slide 4: Drew's Segments — LTM 09/2013
Drew's Segments — LTM 09/2013 Net Sales - $991 million H=$124 million 12% > Segment Operating Profit - $72 million a er
Slide 5: Drew's Products — Components for RVs and Manufactured Homes
Drew's Products —- Components for RVs and Manufactured Homes Net Sales of $991 Million for the 12 Months Ended September 30, 2013 RV Fumiture and Mattresses: RV Chassis, Slide-outs and Other Chassis Parts: , 92 million MH Chassis and $ $482 million Chassis Parts: $40 million Other Products: $60 mill
Slide 6: Financial Performance
Financial Performance Net Sales and EBITDA "") (in mitions) Net Sales = RV Segment net salesmen MH Segment net sales == EBITDA EBITDA $1,200 $120 $105 $1,000 ‘$90 ‘$800 ‘$75 $600 + ‘$60 ‘$45 ‘$400 $30 $200 ‘$15 $0 $0 (1) EBITDA is operating profit plus depreciation, amortization and goodwill impairm
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 Il RV Industry
Slide 9: RV Market
RV Market TOWABLE RVS (Approximately 82% of Drew's RV Segment net sales) Travel trailer with Sport utility RV expandable ends “Toy Hauler” Folding camping trailer Truck camper =P Fifth-wheel travel trailer 90% of industry 2012 unit sales 66% of 2012 wholesale dollar sales, or $7.0 billion Retail cos
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 NEL football games > NASCAR events > More active, shorter, “greener”, & family oriente
Slide 11: RVs - Industry Wholesale Shipments
RVs - Industry Wholesale Shipments Approximately 82% of Drew's RV Segment net sales are for Travel Trailer and 5" Wheel RVs Industry Units 500 (Industry units in thousands} Motorhomes Other Towables Sai mTravel Trailers @ 5th Wheels 394 391 370 300 200 100 0 2001 2002-2003 2004» 20052008 +~=-2007 20
Slide 12: Recent RV Industry Trends
Recent RV Industry Trends Travel Trailer and 5!" Wheel RVs, Drew's primary RV market Units 300 275 250 225 200 175 150 125 100 75 50 25 o Dealer Inventory Change (Units in thousands) 207.9214.1 | Sep YTD ‘12 Sep YTD ‘13. ME Wholesale "= Retail = = 242.9 226.4 212.9 eee, 199.2 206.0 188.2 190.4 185.
Slide 13: Demographics
Demographics (RV CONSUMER DEMOGRAPHIC PROFILE — 2011) 2011 Number of U.S. households that own an RV 7.9 million 8.9 million Household ownership rates of RVs 8.0% 8.5% Average age of all RVs 12.7 years 14.2 years Avesta consumers have owned their 6.6 years 8.4 years Age of typical RV owner 49 years 4
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 82% of Drew’s RV Segment net sales are for Travel Trailer and 5" Wheel RVs _—_Drew’s Units Net Sales {industry units in thousands, net sales in millions} 800 $900 $867 Snotorhomes 700 $800 m=mROther Towables $
Slide 16: Content Per New Towable RV
Content Per New Towable RV - Approximately 82% of RV Segment net sales are for Travel Trailer and Fifth-Wheel RVs - 100% market share in existing products would yield approximately $5,000 per Towable RV - Growth in RV “features” drives content increases 2001 2002 2003 2004 2005 2006 2007 2008 2009 2
Slide 17: RV Segment Net Sales by Type
RV Segment Net Sales by Type LTM 9/13- $867 Million $88 million $24 million 10% $41 milion 3% LTM 9/12- $740 Million $70 million $17 million 10% $29 million, 2% 4% = Travel Trailer & Fifth-Wheel - OEM = Motorhome - OEM Aftermarket = Adjacent Industries are
Slide 18: Section IV: Manufactured Housing Industry
SECTION IV Manufactured Housing Industry
Slide 19: 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 that MHs built since 1995 sustain no more dama
Slide 20: Manufactured Housing — Industry Production
Manufactured Housing — Industry Production meusty Industry units in thousands) Units 250 === Multi-Sections =m Single-Section 200 + 493 168 150 147 11 131 417 100 28 83 5588 55082 50 o 2004 2008” 2006 2001 2002-2003 2007 2008-2009 201020112012 LTM93 MH Share 75% 78% «70% ~=—«CTA4%H_~S««BSNE:«C72%~=—
Slide 21: 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 22: Section V: Our Manufactured Housing Segment
SECTION V Our Manufactured Housing Segment
Slide 23: Manufactured Housing — Industry Production (Compared to Drew's Performance)
Manufactured Housing — Industry Production (Compared to Drew's Performance) a {industry units in thousands, net sales in millions) ie 250 m= Multi-Sections =m Single-Section mm: Drew's MH net sales $250 $221 5220 _ 200 s200 S175 180 $160 $125 100 $100 $75 50 $50 325 0 so 2001 2002 2003-2004 += 2005
Slide 24: Content Per New Manufactured Home
Content Per New Manufactured Home - 100% market share in existing products would yield approximately $4,500 per home - Affordability of the homes constrains content growth $1,666 1,493, $1,450 $1,429 Stas $1,465 $1,368 $1,307 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LTM 913 Sectio
Slide 25: MH Segment Net Sales by Type
MH Segment Net Sales by Type LTM 9/13- $124 Million LTM 9/12 - $120 Million OEM Aftermarket. Adjacent industries eon
Slide 26: Section VI: Strategy
SECTION VI Strategy
Slide 27: Business Strategy
Business Strategy © Maximize profitability and return on assets through = New product introductions = Market share growth = Operational efficiencies = Diversification to related industries = Strategic acquisitions © This strategy accomplished through = Outstanding customer service = Motivating manag
Slide 28: Expanding Our Growth Potential
Expanding Our Growth Potential Est. Total Opportunities Market 2011 — Aluminum Extrusions a - $ 200 million 2011 — Cross Sell Existing Pre Markets, as well as Mid-
Slide 29: 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 cust
Slide 30: New Products and Acquisitions
New Products and Acquisitions Acquire TRAIL AIR: Adding RV ‘Acquire HOME-STYLE: Expanding furniture for RVs in Northwest market Introduce Began RVLOCK remote 7 roduction of ACQUIRE sree ray doors locking product idstates: products pili Acquire EA Foca oe TECHNOLOGIES: eherll ba reors Expanding towab
Slide 31: New Product History
New Product History Awnings Year Estimated Current RV Market Share 50% 20% =30-
Slide 32: 2010 — 2013 Acquisitions
2010 — 2013 Acquisitions Purchase Historical Price Level-Up TM(1) $ 1.4 $ 1 oe leveling system for fifth-wheel Schwintek") § 2O0|\$ 8 | Ree einem Sellers § oS 1 =a Home-Style!!) $ 7.3 |$ 12 _| tenable vein tne Norwest meet MTecl!) § 60/9 12 ||RUeerr: inall EA Technologies S 1835/8 2 | Be tll Starque
Slide 33: Section VII: Operating Results
SECTION VII Operating Results
Slide 34: Operating Results
Operating Results Three Months Ended September 30, FINANCIAL PERFORMANCE (S in millions, except EPS) 2012 2013 Change Net Sales $ 226.3) $ 250.9 11% Operating Profit SRA 22.8 53% % of Sales 6.6% 9.1% Net Income $ Orsi 14.8 52% Diluted EPS $ 043) $ 0.62 44%
Slide 35: Operating Results
Operating Results Nine Months Ended September 30, FINANCIAL PERFORMANCE (S in millions, except EPS) 2012 2013 Change Net Sales $ 700.9 $ 790.6 13% Operating Profit SREOESIE | 62.1 21% % of Sales 7.3% 7.9% Net Income SeeS2Op 39.0 20% Diluted EPS $ 1.43) $ 1.65 15% =34-
Slide 36: Results By Segment
Results By Segment Three Months Ended September 30, FINANCIAL PERFORMANCE (S in millions) 2012 2013 Change Net Sales: RV Segment Selo 218.0 12% MH Segment $ 314, $ 32.9 5% Operating Profit: RV Segment S 116) & We 66% MH Segment $ SAIS 3.6 7h Operating Profit as a Percentage of Net Sales: RV Segment
Slide 37: Results By Segment
Results By Segment Nine Months Ended September 30, FINANCIAL PERFORMANCE (S in millions) 2012 2013 Change Net Sales: RV Segment $ 608.9; $ 695.0 14% MH Segment S OY | SS SEYS 4% Operating Profit: RV Segment $ 40.9) $ 54.1 32% MH Segment $ 104) $ 99 (4%) Operating Profit as a Percentage of Net Sales:
Slide 38: Debt Position
Debt Position FINANCIAL PERFORMANCE Cash Utilized for Acquisitions Cash and Net Cash During the YTD (Sin millions) Debt Investments (Debt) 12/31/10 fT $22 12/31/11 | $ = $ 50 LA So 09/30/13 | $ = $ 2 [I] On December 28, 2010, the Company paid a special dividend of $1.50 per share of the Company's Co
Slide 39: Balance Sheets
Balance Sheets (S in millions) FINANCIAL PERFORMANCE Total Assets $ 450 Total Debt g$ - 8 = s 2 Cash & $ i $ 104) | $ Ss) Investments Stockholders’ $ 243° |$ 277 |$ 2844 1$ 343 Equity RATIOS Days Sales in A/R"” 13 days 17 days 14 days 20 days Inventory Turns”) 6.5 turns 6.2 turns 7.8 turns 7.8 turns
Slide 40: Cash Flow
Cash Flow FINANCIAL PERFORMANCE Sig ificant use of cash items since December 31, 2007 Acquisitions (15) $115 million Capital expenditures $100 million Debt reduction $ 27 million Special dividends $ 78 million Stock repurchases $ 10 million Total $ 330 million =39-
Slide 41: Financial Strength
Financial Strength FINANCIAL PERFORMANCE (12 months ended) 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 09/30/13 Return on Equity 6%") 2%") 11% 11% 13% 14% Return on Assets 4%) 2%'*) 9% 9% 10% 10% Hie He 0.00 | 0.00 000 | 000 | 000 | 0.00 Hea us 0.20 0.00 0.00 0.00 0.00 0.00 (1) EBITDA is operating
Slide 42: The Future
The Future 1) 1) 0) (0) 0) Increasing RV content RV industry growth Demographic tailwind Expanding into adjacent industries Affordable housing recovery “Ale
Slide 43: Stock Price History
Stock Price History = Drew has 23.2 million shares outstanding and a 60 50 market capitalization of approximately $1.18 billion as of November 7, 2013 sn K\ Vann! a 7 ia $8. $14 $12 $5 2001 2002 2003 2004 ©2005 2006 2007 10/5/07 2008 3/9/09 2009 2010 2011 2012 11/7/13 (December 31, unless noted) 242
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 Lippert Chief Executive Officer 574-535-1125 JasonL@lci1.com Joseph S. Giordano Ill CFO & Treasurer 574-535-1125 joe@drewindustries.com OR VISIT OUR WEBSITE: www.drewindustries.com > 4 sans
Slide 46: Reconciliation of Operating Profit to EBITDA
Reconciliation of Operating Profit to EBITDA FINANCIAL PERFORMANCE (in millions) 2001 2002 «2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ate Ge $20.3 | $29.2 | $343 | $440 | $57.7 | $55.3 | $66.0 | $19.9 | $135.6) | $45.2 | $48.5 | $58.1 | $69.0 Depreciation & | $3.4 | $73 | $78 | $93 | $120 |
Slide 47: Reconciliation of Segment Results to Consolidated
Reconciliation of Segment Results to Consolidated FINANCIAL PERFORMANCE Net Sales: RV Segment $ 368.1 | $ 312.5 | $ 477.2 | $ 570.6| $ 780.9 | $ 867.0 MH Segment 142.4 85.3 95.6 110.6 120.2 123.9 Total Net Sales $ 510.5 | $ 397.8 | $ 572.8 | $ 681.2} $ 901.1} $ 990.9 Operating Profit: RV Segment SIZ
Drew Industries — Investor Presentation (November 2013) on 6ix