Lci Industries · NYSE:LCII
Lci Industries — Investor Presentation (March 2019)
49 slides from Lci Industries's investor presentation, Mar 15, 2019
Slide 1: LCI Industries
Ig) | INDUSTRIE 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: Company values
passionate about %& a o a winning? team play with trust 4) 35 honesty - integrity#candor + caring about = people 5 o Lcl INOUSTRIES
Slide 4: Financial Performance
>» Financial Performance Net Sales = OEMnet sales Aftermarket netsales = EBITDA” EBITDA 52,500 yt $400 : Net Sales and EBITDA (in mitions) ” $2,250 $2,148 $350 $2,000 $1,977 $300 $1,750 $1,500 eQ $1,250 y $200 $1,016 $1,127 $1,000 $901 ae 5150 $750 $681 $866 i $100 $500 $250 $174 f $50 so 50 2011 20
Slide 5: Net sales by segment
OEM Towable $503 $660 $725 $836 $932 $1,082 $1,404 $1,432 OEM Motorhome 16 30 48 70 87 116 138 144 Aftermarket 3 3. 64 103 131 222 icc a International 5 11 14 28 46 104 Te a Total $681 $901 $1,016 $1,191 $1,403 $1,679 $2,148 $2,476 + Sales of Furrion products were approximately $90M for 2018 + Prior
Slide 6: Non-OEM Towable RV Net Sales
Non-OEM Towable RV Net Sales $1,044 CAGR $1,000 28% $800 ns) $600 = = & $400 $200 $0 2010 2018 = OEM Adjacent industies = Aftermarket ™OEMRV Motorhome International Sales for the year ended December 31, 2010 compared to the year ended December 31, 2018. Both periods exclude the Company's net sales o
Slide 7: Consolidated Sales Growth
Consolidated Sales Growth Sales for the years ended December 31 for each year unless noted 2013 2014 2015 2016 2017 2018 © a) Pro forma impact of acquisitions completed in 2018, assuming each of these had been completed at the beginning ofthe period ended December 31,2018. b) Sales for acquisitions
Slide 8: OEM and Aftermarket Industries
OEM and Aftermarket Industries Lcl INOUSTRIES
Slide 9: RV Wholesale Shipments
> RV Wholesale Shipments Thousands of Units Es MN Thousands of Units m VES = S PB ge PF @ @ - PPK LK SF KK SS HH ¢ Cees se s one a) 200 40% 5 800 175 3 70 150 oe Hes =- aval 3 a 3 500 4 = # 12 Viale DAM a on |_ ¥ VN Po 4 awa a 100 ZA 25 ae . ° ey ee € £ SF FS RV Shipments Charts updated through Dece
Slide 10: Product Lines & Volumes
> Product Lines & Volumes
Slide 11: 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 12: Industry Trends
> Industry Trends | 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 13: Market Shift
> Market Shift Statistic y Statistic RV MarketShare by Age 30% | Younger Market = ——— 25% Almost 10% shift in market “a =e share from Baby Boomers to 15% = Millennials OR Millennials are the largest age = ——— 6 ae group and have doubled their market share since 2014 oe) 2014, «2015-2016 2017's «08/1
Slide 14: Population Demographic Trend
>» Population Demographic Trend a From 2018 through 2030, this demographic is expected to grow by an additional 6.4 million individuals US Population age 35-44 Key population demographic begins to decline 46,000 — Poisedto retum 4000 —_ i to growth after a =~ ste 14 year decline 1990 1992 1994 1996
Slide 15: Camping Industry
> Camping Indu: ry by Kampgrounds of America ("KO a Tent Campers 66», 34.1 million Camp Every Year 38.6 million 46. 24. 9% 0 Camp Every Active Campers RV Campers Other Year as 13.4 million 5.0 million 4 58.1 million- = | 4 25% 0, Camp Occasionally Cabi i 14.6 million abin Campers 7.8 million \ J * E
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: Historical acquisitions
istorical Pontoon furniture manufacturing operation of Highwater Highwater Furniture 10.0 20 ‘Marine, part of the largest manufacturer of pontoon boatsinthe US Project 2000 18.8 4 epee ee Sessaklein! 85 1 Halian manufacturer of rolling stock train windows Metallarte!! 14.1 12 ee eee Hehr 51.5 55 Win
Slide 18: Expanding Our Growth Potential
> Expanding Our Growth Potential" Doors, Windows, Mattresses, Furniture and Awnings Appliances & Travel Trailer Leveling Electronics Electronics Chassis and Axles Axles Aftermarket Bete orit fee International (1) Amounts [in millions) represent Management's estimate of the size of the addressable ma
Slide 19: Content Per New Towable RV
> Content Per New Towable RV Approximately 64% 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, 47% penetration ge Content has increased $428 or 14% since 2016, up from the average of $157 per
Slide 20: Content Per New Motorhome RV
>» Content Per New Motorhome RV Approximately 8% of OEM Segment net sales are for Motorhome OEMs 100% market share in existing products would yield an a e estimated $6,000 per Motorhome RV, 42% penetration cy 760% 2% Content has increased $480 or 24% since 2016, up eo? =~ from the average of $165 pe
Slide 21: Supplemental Schedules
Supplemental Schedules Lcl INOUSTRIES
Slide 22: Operating Results (Quarter)
> Operating Results Three Months Ended December 31 FINANCIAL PERFORMANCE ($ in millions, except EPS) 2018 2017 Change Net Sales $ 536.6 $ 547.1 (2%) Operating Profit $ 29.5 $$ 44.2 (33%) % of Sales 5.5% 8.1% Net Income $ 20.2 $ i ASS) 16% Diluted EPS $ 080 $ 0.68 18% Charge resulted from the re-meas
Slide 23: Operating Results (Year)
> Operating Results Years Ended December 31 FINANCIAL PERFORMANCE ($ in millions, except EPS) 2018 2017 Change Net Sales $ 2,475.8 $2,147.8 15% Operating Profit $ 198.8 $ 2143 (7%) % of Sales 8.0% 10.0% Net Income $ 148.6 $ 132.9 12% Diluted EPS $75.83) $ 5.24 11% During the fourth quarter of 2018 a
Slide 24: Results By Segment (Quarter)
» Results By Segment Three Months Ended December 31 FINANCIAL PERFORMANCE ($ in mi 20 2017 Net Sales: OEM Segment $ 485.5 $ 505.9 (4%) Aftermarket Segment Sell 41.2 24% Operating Profit: OEM Segment 23.0 38.4 (40%) Aftermarket Segment 6.5 5.8 12% Operating Profit as a Percentage of Net Sales: OEM Se
Slide 25: Results By Segment (Year)
» Results By Segment Years Ended December 31 FINANCIAL PERFORMANCE ($ in mi 20 2017 Net Sales: OEM Segment $2,242.6 $1,976.6 13% Aftermarket Segment 233.2 U7Alel| 36% Operating Profit: OEM Segment 167.5 190.3 (12%) Aftermarket Segment 31.3 24.0 30% Operating Profit as a Percentage of Net Sales: OEM
Slide 26: Debt Position
>» Debt Position FINANCIAL PERFORMANCE Cash and Net Cash poe sea ( Investments (Debt) the Period 12/31/11 $ = $ Zz $ 7 $ 50 12/31/12 2 Jol) Jon) 1 12/31/13 2 66 66 5 12/31/14 16 - (16ym 107 12/31/15 50 12 (38)!) Al 12/31/16 50 86 3602) 49 12/31/17 50 26 (24)'9) 63 12/31/18 294 15 (279)(41 185 (1) In
Slide 27: Cash Flow
> Cash Flow ($ in millions) FINANCIAL PERFORMANCE Acquisitions (32) $ 560 Capital expenditures 422 Dividends 318 Stock repurchases 30 Total $ 1,330
Slide 28: Cash Flow
Cash Flow FINANCIAL PERFORMANCE $400 po23 $400 se Acquisitions Cnr ets $350 peer $350 iss mm Dividends $300 + Operating Cash Flow $300 $250 $250 $203 $201 . $200 $150 $100 $50 $0 2010 2011 2012 2013 (1) 2014 2015 2016 2017 2018 \ Operating cash flow from 2010 to present ($ in millions) (1) Cash divi
Slide 29: Balance Sheets
> Balance Sheets FINAP LL PERFORMANCE (Sin mi 12/31/12 12/31/13, 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 Total Assets $ 374 $ 453 $ 544 $ 623 $ 787 |S 946 )|$ 1,244 Total Debt - - 16 50 50 50 294 Cash & Investments 10 66 - 12 86 26 16 Stockholders’ Equity 28419) 3148) 395 43913) 55014) 65315) 7
Slide 30: Financial Performance: debt, ROIC
FINANCIAL PERFORMANCE Return on Invested ; Total Debt te ’ , i (2) EBITDA is net income plus income taxes, interest expense, depreciation and amortization (see 0 (1) ROIC is operating profit over average invested capital (total stockholders equity + indebtedness) — (cash, cash equivalents and short-
Slide 31: Reconciliation of Net Income to EBITDA
> Reconciliation of Net Income to EBITD FINANCIAL PERFORMANCE (S in millions) 2010 2011 2012 2013 2014 2015 16 17 1018 Net Income $28.0 $30.1 $37.3) $50.1 $623 $74.3 $129.7 $1329 $148.6 Income Taxes 12 18.2 20.5 278 32.8 40.0 69.5 80.0 43.8 Interest Expense 0.2 03 03 0.4 0.4 Lo: Vz 14 64 Depreciatio
Slide 32: Segment Net Sales and Operating Profit
vv Segment Net Sales: OEM $ 865.9 $ 9765 $1,127.0 $1,300.1 $1,548.1 $1,976.6 $2,242.6 ___ Aftermarket 39.1 63.8 103.0 130.8 1A 233.2 ] Segment Operating Profit: OEM § 56.1 4 746 4 887 $ 1052 4 180.9°4 1903 4 1675 Aftermarket 3.5 5.6 87 14.8 20.0 24.0 He EEE Severance si si si (3.7) 3 3 Executive Suc
Slide 33: Shares outstanding and market capitalization
= LCl Industries has 24.9 million shares outstanding and a market capitalization of approximately $2.0 billion as of February 28, 2019 * Dates noted above are as of December 31, unless noted. * Stock prices above are not adjusted for dividends. Lc! INDUSTRIES
Slide 34: Industry Statistics Summary: Towable RVs
Let industries Industry Statisties Summary TOWABLE RECREATIONAL VEHICLES (RV) TORE] PSSST OE 1 COO 1_ are ore 3eveo ose (eee00 tae Biss Tres30 ae ‘kas 47.070 See 37 000 tox bs 880 — one — a 700 B87 aes aise ‘Seo — tao aay ane OO IA 2 WOO AAT BLN Eo a7 ar tus
Slide 35: Industry Statistics Summary: Motorized RVs
Let industries Industry Statisties Summary MOTORIZED RECREATIONAL VEHICLES (RV) ETON SESE Lt — a ay —— —— —
Slide 36: Analyst Coverage
> Analyst Coverage Citi Research ” Thompson Research Group > Gregory Badishkanian — (212) 816-2720 > Kathryn Thompson — (615) 891-6206 CJS Securities a Baird > Dan Moore — (914) 287-7600 > Craig Kennison — (414) 765-3870 CL King & Associates > Scott Stember — (212) 364-1806 Sidoti & Company > Stephe
Slide 37: Lcl INOUSTRIES
Lcl INOUSTRIES
Slide 38: Management Team
Lel INDUSTRIES Management Team } JASON LIPPERT, CEO 20+ years with LCI Industries BRIAN HALL, CFO 5+ years with LCI Industries Average tenure of LCI’s members of senior managementis 15+ years with the company “he
Slide 39: RVs - Industry Wholesale Shipments
» RVs - Industry Wholesale Shipments (Compared to LCl’s Performance) ingustY Approximately 64% of LC's OEM Segment net sales are for Travel Trailer and 5" Wheel RVs jer ecies (Industry units in thousands, net sales in millions) 800 $1,800 == Motorhomes $1,565 eue28 $1,600 700 Other Towables . i Trav
Slide 40: RV Market
> RV Market (Approximately 64% of LCl’s 8 8., of industry 2017 unit sales 0 OEM Segmentyabs Je of 2017 wholesale dollar sales, , 02: or $12.4 billion 7 Retail cost $4,000 to $100,000+ per unit. Average about $30,000 (Approximately 8% of LCl'sa.__, 7 2», of industry 2017 unit sales OEM Segmentnet sal
Slide 41: RV vacation value and demographics
Typical RV family vacation is 23 to 59 percentless expensive for a family of four according to RVIAstudies Oo The number of consumers between the ages of 55and 70 is projectedto total 56 million by 2020 Generation X and Millennials are a source of industry growth mainly in the entry-level market Col
Slide 42: RV Industry Trends
>» RV Industry Trends Units Travel Trailer and 5" Wheel RVs, LCI’s primary RV market Wholesale Retail ao 415 419 {Units in thousands} 400 363 555 EEE 279 27 262 ee 0 "2007 2008 «= 2009S «2010S 2011-2012, «2013S 2014S «2015 2016. «= 2017 «2018 Estimated Dealer (17) (41) (26) 13 Z 20 7 22 (3) 10 30 (4
Slide 43: Number of U.S. Households that Own an RV
> Number of U.S. Households that Own an RV (in Millions) 10 6 =| 4 [J u i 1980 1984 1988 1993 1997 2001 2005 2011 ey) Statistics provided by RV Consumer Demographic Profile — 2011
Slide 44: Demographics
>» Demographics Number of U.S. households that own an RV 7.9 milion 8.9 million Household ownership rates of RVs 8.0% 8.5% Average age of all RVs 12.7 years 14.2years Average time consumers have owned their current RV 6.6 years 8.4 years Average income of RV owner $78,000 $75,000 expecting to purcha
Slide 45: What's Next...
What’s Next... o Lcl INOUSTRIES International RV Innovation/R&D Aftermarket OEM Adjacent Markets + Acquisitions + Additional Addressable Market On
Slide 46: International RV Markets
Slide 47: Research and Development
Slide 48: Aftermarket Opportunity
Slide 49: Bus
Bus Fleet Marine Cargo Train