Lci Industries · NYSE:LCII
Lci Industries — Q1 2018 Earnings Presentation
49 slides from Lci Industries's earnings presentation, May 10, 2018
Slide 1: lippertcomponents.com
lippertcomponents.com > LU rz 600 ~~) O = Lu or Lu r ” Z Oo Lu m
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: Team play with trust, caring about people
9AIRISOd team play with trust 4, =r caring about = people 3: 2
Slide 4: Net Sales and EBITDA
Net Sales OEM net sales Aftermarket net sales <4 EBITDA” EBITDA Net Sales and EBITDA (in mitlions) (1) EBITDA is net income plus income taxes, interest expense, depreciation and amortization (see supplemental schedule) LCI INDUSTRIES.
Slide 5: Year over year growth
Year over year growth Year over ye Year over year growth Year over year growth Year over year growth $681 $901 $1,016 $1,191 $1,403 $1,679 $2,148 $2,300 19% 32% 138% TH 18% 0% 8H 31% ° ) * Sales of Furrion products were over $85M for 2017 \ + Prior periods have been recast to conform to the Company'
Slide 6: Sales excluding OEM Towables
Sales for the year ended December 31, 2010 compared to the last twelve months ended March 31, 2018. Both periods exclude the Company's net sales of components for OEM Towables, which made up 75% and 63% of consolidated net sales, respectively. LCI INDUSTRIES.
Slide 7: Pro forma impact of acquisitions
Proforma impact of acquisitions completed in 2017 and 2018, assuming each of these had been completed at the beginning of the period ended March 31, 2018. Sales for acquisitions represent the trailing twelve month sales at the date of acquisition. Any post- acquisition change is included in organic
Slide 8: OEM and Aftermarket Industries
OEM and Aftermarket Industries
Slide 9: RV Shipments
® RV Shipments Charts updated through March 2018. Federal Interest Rate Consumer Confidence U.S. Monthly Average Truck Production LCI INDUSTRIES.
Slide 10: Interest Rates and Economic Factors
*Interest Rates *New Private Housing *Fuel Prices *Fuel Availability *Consumer Sentiment _ **Wholesale & Retail Credit Availability *Wages & Employment | ———— **Car & Light Truck Sales —= Dedlelivantrric _'>"'-
Slide 11: Product Lines & Volumes
> Product Lines & Volumes FURNITURE APPLIANCES SHOWERS AUDIO-VISUAL 5,000 + RV & MARINE PIECES DAILY AWNINGS MATTRESSES ELECTRONICS SSIS Bo eae 2,800 MATTRESSES DAILY ELECTRONICS WINDOWS “ue PEGESOALY 2,000+ ene DAILY Gey iets | Tome ee reas, Leveune 3,100 + RV & TRAILER AXLES DAILY 3,500+ PIECES DA
Slide 12: Product Breadth
Product Breadth It would take a competitor substantial investments to be able to manufacture the breadth of products that we offer Investment into R&D We make significant investments in R&D and our facilities Customer Relationships We strive to have the best customer relationships in the industry (_
Slide 13: Millennials Fueling Growth
| Millennials Fueling Growth 31% of the total US population 37% of all campers 49% intend to increase the frequency in which they camp Willing to try RVs at the same rate as tents More apt to camp in groups
Slide 14: Millennial demographic growth 2018-2030
From 2018 through 2030, this demographic is expected to grow by an additional 6.4 million individuals Sources: Euromonitor, BofA Merrill Lynch Global Research LCI INDUSTRIES.
Slide 15: Campers in the U.S.
EE 61, Tent Campers 6 6% A= 34.1 million Camp Every Year 38.6 million 46.. = \ 24», 9% Camp Every =) RV Campers Other Year ~~ 7 = 13.4 million 5.0 million Te pti 1 4., “ane 9% 14.6 million j Active Campers | 58.1 million: Cabin Campers 7.8 million Ig * Estimates based on 126.2 million households. Al
Slide 16: Manufacturing capabilities
Fabric and Electronics and Steel and Lamination Steel and Motion- Woodworking Plastic Forming Aluminum and Glass Aluminum Systems Fabrication Fabrication Welding
Slide 17: Recent acquisitions
Pontoon furniture manufacturing operation of Highwater Highwater Furniture ] 0. (@) 20 Marine, part of the largest manufacturer of pontoon boats in the U.S. Italian manufacturer of bed lifts and retractable steps, Project 2000!) establishing European footprint Sessaklei nl2 Italian manufacturer of r
Slide 18: RV Content
RV Content $2,100 (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. LCI INDUSTRIES.
Slide 19: Travel Trailer and Fifth-Wheel content opportunity
Approximately 70% of OEM Segment net sales are for Travel Trailer and Fifth-Wheel OEMs 100% market share in existing products would yield an estimated $7,400 per Towable RV, 45% penetration For 2018, Travel Trailer unit volume was up 19% y/y due in part to an increase of entry-level units Growth in
Slide 20: Motorhome content opportunity
Approximately 8% of OEM Segment net sales are for Motorhome OEMs 100% market share in existing products would yield an estimated $6,000 per Motorhome RV, 39% penetration $1,227 $1,272 $669 $705 At industry production levels for the period ended March 2018, each $100 increase in content adds approxim
Slide 21: Supplemental Schedules
Supplemental Schedules
Slide 22: Financial Performance
Three Months Ended March 31 FINANCIAL PERFORMANCE
Slide 23: Three Months Ended March
Three Months Ended March 31 FINANCIAL PERFORMANCE | | Net Sales: Aftermarket Segment Operating Profit as a Percentage of Net Sales: Aftermarket Segment 11.7% 130%
Slide 24: Financial Performance: dividends
FINANCIAL PERFORMANCE In December 2012, January 2014 and April 2015, the Company paid special dividends of $2.00 per share of the Company's Common Stock, or an aggregate of $45 million, $47 million and $48 million, respectively. In June, April and September 2016, the Company paid dividends of $0.30
Slide 25: Financial Performance ($ in millions)
($ in millions) FINANCIAL PERFORMANCE
Slide 26: Operating cash flow from 2010 to present
FINANCIAL PERFORMANCE eot0 ' $45 S28 $45 $26 Operating cash flow from 2010 to present ($ in millions) (1) Cash dividend of $2.00 per share, or $47 million, declared in December 2013 and paid in January 2014. LCI INDUSTRIES.
Slide 27: Financial Performance: working capital metrics
FINANCIAL PERFORMANCE feomanvetmens | 10) 68 |= | |e (1) Days Sales in A/R is the most recent month's net sales divided by accounts receivable, net, at the end of the period. December 31 is the seasonal low point. (2) Inventory Turns is cost of goods sold for the last twelve months divided by averag
Slide 28: Return on invested capital and debt to EBITDA
FINANCIAL PERFORMANCE Return on Invested Total Debt to : , ’ i a (2) EBITDA is net income plus income taxes, interest expense, depreciation and amortization (see . (1) ROIC is operating profit over average invested capital (total stockholders equity + indebtedness) — (cash, cash equivalents and shor
Slide 29: Financial Performance: net income and capex
FINANCIAL PERFORMANCE Netncome $280, $50 | $979, $501, $529 $749) $1207, $1029 1071 ‘eteretSiperse| 02/09/03) 04/04) 19) 7) 1a Capital _ Expenditures 10.1 24.3 220 32.6 AS Any 67.2 || 101.2
Slide 30: Total segment operating profit
FINANCIAL PERFORMANCE Total Segment Operating - ae ; nee ze igeerrsonere | oe m2) m4) imo) mp | 249) Saleofexmsionasels I) Lc! INDUSTRIES
Slide 31: Shares outstanding and market capitalization
= LCl Industries has 25.0 million shares outstanding and a market capitalization of approximately $2.4 billion as of April 30, 2018 a, ¥ * Dates noted above are as of December 31, unless noted. ~ * Stock prices above are not adjusted for dividends. LCI INDUSTRIES.
Slide 32: Industry Statistics Summary: Towable RVs
LC1 Industries Industry Statistics Summary TOWABLE RECREATIONAL VEHICLES (RV) Towastes™™ Wholesale Units LI Foran Unie 1_t jealer Inventory Inmect Jan-17 38.100 7% 238-100 7% (64.600. 460 23%. 16.450 239 55.74 11.650. 71.650. Feb-17 33.100 10% 61,200 9% {67.600 344175 37.794 19% 58.775 14.756 23.406
Slide 33: Industry Statistics Summary: Motorized RVs
LCl Industries Industry Statistics Summai MOTORIZED RECREATIONAL VEHICLES (RV) MoTORZED™ Wholesale Units Lf Retail Units 1_I Dealer Inventory Impact Mone wal} TIM ao} Tonk wal} om 22001196. 54600 16%. 54,800 46,789 1,816 8017 ‘8017 4,900 14% 55,400. 2.763 2.137 2137, 3.284, 5:600___17%, 56.200. 5997
Slide 34: Market Shift
Le! Nous Market Shift Share of new light-vehicle buyers by age 50% — Birth years 4 es 1946- "5 «1964 30 1977- @ 1994 » 1965- 20 1976 10 & Before 1945 O ; = BH 1995- 2010 ‘ll ‘12 113 14 ‘15° 2014 “Through Nov. Source: J.D. Power THE WALL STREET JOURNAL.
Slide 35: Analyst coverage
Citi Research Gregory Badishkanian — CJS Securities Dan Moore — CL King & Associates Scott Stember — Sidoti & Company Stephen O’Hara — Thompson Research Group Kathryn Thompson — @ *Planning to initiate coverage LCI INDUSTRIES. Baird Craig Kennison — Northcoast Research Seth Woolf — Wells Fargo* Marc
Slide 36: Appendix
Appendix
Slide 37: Watch the video
fy atch the video
Slide 38: Management Team
JASON LIPPERT, CEO 20+ years with LCI Industries LCI INDUSTRIES Management SCOTT MERENESS, PRESIDENT Team 20+ years with LCI Industries BRIAN HALL, CFO 5+ years with LCI Industries Average tenure of LCI’s members of senior management is 15+ years with the company Baze
Slide 39: OEM RV
OEM RV Net Sales Industry Units Approximately 70% of LCIl’s OEM Segment net sales are for Travel Trailer and 5'" Wheel RVs (Industry units in thousands, net sales in millions) it 3 A ar 4a = Projections for 2018 are the latest published by the RVIA (Spring 2018). OEM RV Segment Net Sales for 2009 an
Slide 40: Towable RVs and Motorhomes
Towable RVs (Approximately 70% of LCl’s OEM Seamer Motorhomes ‘Approximately 8% of LCl’s.. _ Pp y OEM Segment net sales) of industry 2017 unit sales of estimated 2017 wholesale dollar sales, or $12.6 billion Retail cost $4,000 to $100,000+ per unit. Average about $30,000 of industry 2017 unit sales
Slide 41: RV family vacation cost and demographics
Typical RV family vacation is 23 to 59 percent less expensive for a family of four according to RVIA studies 2 LCI INDUSTRIES. 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 ent
Slide 42: Travel Trailer and 5th Wheel RVs wholesale and retail
Travel Trailer and 5** Wheel RVs, LCl’s primary RV market Wholesale = Retail (Units in thousands) Hamill Cumulative dealer inventory change from 2006 to 2016 is estimated to be a net increase of 2, which indicates dealer inventories recently reached pre-recession levels. Industry wholesale productio
Slide 43: RV Consumer Demographic Profile
Statistics provided by RV Consumer Demographic Profile — 2011 LCI INDUSTRIES.
Slide 44: RV Consumer Demographic Profile 2
(RV CONSUMER DEMOGRAPHIC PROFILE — 2071) eee ers = * 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 intending to purchase either a new or used RV plan to purchase in about five years on average. 4 Lc!
Slide 45: What's Next
What’s Next... International RV Innovation/R&D - Aftermarket OEM Adjacent Markets - Acquisitions - Additional Addressable Market
Slide 46: International RV Markets
International RV Markets Europe is second to U.S. in unit production Acquired Project 2000 in 2016 — European footprint expanding bed-lifts Acquired Sessa Klein in 2017 — Train windows “4 providing entry-point for caravan windows Acquired Metallarte in 2017 — Entry and compartment doors for the cara
Slide 47: Research and Development
NNN NN Research and Development Focus on innovation Invested over $14 million in 2017 Development, engineering, product testing We have inventors on staff Patent protected technology Pushing product development collaboratively with our customers We are an integral part of our customers’ R&D teams
Slide 48: LCI
2) LCI INDUSTRIES.
Slide 49: Marine Cargo Train
Marine Cargo Train