Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (May 2006)
36 slides from Lci Industries's investor presentation, May 8, 2006
Slide 1: A Leading National Supplier of a Wide Variety of Components for RV's and Manufactured Homes
A Leading National Supplier of a Wide Variety of Components for RV’s and Manufactured Homes Drew Industries (NYSE:DW)
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 OF synergies, competitive posi
Slide 3: About Drew Industries
About Drew Industries A leading national manufacturer of quality components for Recreational Vehicles (RV) and Manufactured Homes (MH)
Slide 4: Drew's Companies
Drew’s Companies prev! = Kinro, Inc. — acquired 1980 (including Better Bath — acquired in 2001) = Aluminum windows for RVs = Doors for RVs = Aluminum and vinyl windows and screens for MHs = Bath and shower units for MHs and RVs = Lippert Components, Inc. — Acquired 1997 (including Zieman Manufacturi
Slide 5: Drew's Products
Drew’s Products previ Sales - $723 million 12 Months Ended March 31, 2006 MH Windows, Doors & Screens: $97 million RV Chassis and Chassis Parts: $214 million MH Chassis & Chassis Parts: $88 million MH Bath Products: $20 million Specialty Trailers: $33 million Other: RV Slide-outs: $20 million Axles
Slide 6: Drew's Segments — LTM 3/31/06
Drew’s Segments — LTM 3/31/06 prew Revenues - $723 million Approximately 95% of RV revenues are for towable RVs DW NYSE
Slide 7: Supplier to Industry Leaders
Supplier to Industry Leaders prev/ ™ Outstanding customer service and national coverage, with 48 production facilities (approximately 3.2 million sq. ft.), make us a key partner with our customers. = Supply most of the Leading Producers of RVs and MHs: Both RV and MH = Fleetwood (NYSE:FLE) = Skyline
Slide 8: Business Strategy
Business Strategy prev/ ™ Increase sales and profitability through: = Market share growth = New product introductions = Strategic acquisitions " This strategy accomplished through: = Outstanding customer service = Motivating management through profit incentives and training programs = Maintaining hi
Slide 9: Drew's Management Team
Drew’s Management Team ™ Highly respected and experienced management: =" Drew Leigh Abrams, CEO, 35+ years Fred Zinn, CFO, 25+ years = Kinro David Webster, CEO, Chairman, 30+ years = Lippert Doug Lippert, Chairman, 30+ years Jason Lippert, CEO, 12+ years = Excellent management training and incentive
Slide 10: Content Per Vehicle - RV
Content Per Vehicle - RV prew Peak potential is $2,400 to $2,700 per RV $907 1999 2000 2001 2002 2003 2004 2005 3/06 LTM profit margin 11.3% 6.8% 8.6% 9.4% 11.3% 9.2%) 9.3%°) 9.4% Excludes sales of specialty trailers Operating (a) Margin in 2004 and 2005 impacted by increases in steel and other mate
Slide 11: Content Per Home - MH
Content Per Home - MH prew Peak potential is $2,900 to $3,200 per home é $1,457 $1,506 $1.42 1999 2000 2001 2002 2003 2004 2005 3/06 Operating LTM Profit margin 15.5% 9.8% 10.8% 11.0% 10.7% 10.1%!) 10.8%) 11.6% (a) Margin in 2004 and 2005 impacted by increases in steel and other material costs and a
Slide 12: New Product Introductions
New Product Introductions prev Slide-out mechanisms for motorhomes $65 25% - 30% Leveling devices for motorhomes 65 <5% Axles for towables 30% - 40% Steps for towables 50+% Bath products for RVs 5% Thermoformed exterior parts 0% Specialty trailers 15% Axles for specialty trailers 150 2% Annualized s
Slide 13: Acquisition Criteria
Acquisition Criteria Complementary to our core RV and MH markets Target less than 6 times pro forma EBITDA Immediately accretive Seek to acquire products or technologies that we can introduce through our nationwide customer base and factory network; become a more extensive supplier to our customers
Slide 14: Acquisition History
Acquisition History prew July 2003 j 2001 LTM Manufacturing Slide-out systems, specialty Better Bath Batiand shawer slide-out storage trays and May 2004 products for MH. Annual decks, and electric stabilizer Zieman Palco S20 Hion jacks for RVs. Annual sales RV, MH and specialty of $4 million trailer
Slide 15: Potential Acquisition - Happijac
Potential Acquisition - Happijac prev/ = Products: = Bed lifts for fast growing “toy hauler’ RVs = Acquisition includes broad patent for these products = Provides significant competitive advantage = Other innovative RV products, including slide-out systems, tie-down systems, and camper jacks ™ Expec
Slide 16: New Products from Acquisitions
New Products from Acquisitions prev/ ™ Increased market penetration for 11 new, innovative products developed by LTM Manufacturing, which was acquired in July 2003. ™ Expanded specialty trailer products through the May 2004 acquisition of Zieman. Consists of specialty trailers for boats, personal wa
Slide 17: Investments
Investments prew = Kinro and Lippert have extensive R&D departments = Since January 1997: = Invested over $139 million in plant and equipment = Invested nearly $140 million for acquisitions = Invested $40 million for stock = repurchases at an average price of $5.37 per share = These investments have
Slide 18: RVs - Industry Shipments
RVs - Industry Shipments prev/ Travel Trailers and 5th Wheel RVs - market for 95% of our current RV products @ Travel Tailers & 5th Wheel & Other Towables Motor Homes (Thousands of Vehicles) 38g 399 311 321 1997 1998 1999 2000 2001 2002 2003 2004(1) 2005(2) 3/06(3) (1) Includes approximately 13,500
Slide 19: RV Market
RV Market prew ™ RV Categories = Towable RVs - 85% of industry unit sales and about 40% of industry dollar sales. Retail prices - $4,000 to $65,000 = Motorhomes - 15% of industry unit sales and about 60% of industry retail dollar sales. Retail prices - $48,000 to $400,000 = Since 1995, the travel tr
Slide 20: Growth In RV Market
Growth In RV Market Positive Demographic Trends = Primary owners of RVs are 50 and over = According to census reports, there are expected to be 20 million more people over 50 in the next 10 years Industry Advertising Campaign = Target Market 30 and over RV Vacations Strengthen Family Ties Post 9/11
Slide 21: MH - Industry Production
MH - Industry Production prew @ Multi-Section Hi Single Section (Thousands of Homes) 150 363 353 373 340 349 (2) (2(3) ae (1) 447 180 131 134 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 3/06 uM ow [sre] (1) Includes approximately 3,500 MHs purchased by FEMA for emergen
Slide 22: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market prew 10 million manufactured homes across the U.S. Improved quality and image should drive MH growth Industry production down 61% since 1998, but Drew’s sales are down much less Drew's MH segment remained profitable every quarter since the downturn began in 1998
Slide 23: MH: Return to Growth
MH: Return to Growth = Signs of Improvement in the Manufactured Housing Industry Low inventory levels at retail dealers Slowing of repossessions Chattel and conventional financing has become more readily available Improved lending practices have made new loans more secure Berkshire Hathaway acquired
Slide 24: MH: Strong Future
MH: Strong Future Demographics - 1st time home buyers and retirees Affordability: Significant cost advantage over site-built homes (2004 data) = MH - $36 per sq. ft. compared to $86 per sq. ft. for site-built homes = Average retail price of $58,100 for a 1,625 sq. ft. manufactured home Improved qual
Slide 25: Drew's Ownership and Governance
Drew’s Ownership and Governance prew Ownership by Executives and Directors aligns our interest with other stockholders. Currently own 18%; after sale of the balance of the shares included in a recently filed Form S-3, insiders will own 13% of shares. Drew’s Corporate Governance Program — ranked in t
Slide 26: Financial Performance
Financial Performance prew/ Stock Price History = The price of Drew’s common stock is about 12 times the price as of December 31, 2000 = Drew has 21.5 million shares outstanding $36 and a market capitalization of $770 million 2000 2001 2002 2003 2004 4/28/06 (December 31 unless noted) Drew effected
Slide 27: Operating Results
Operating Results prev/ Year Ended December 31, Sales $353.1 $530.9 $669.1 Operating Profit $ 34.3 $44.0 §$ 57.7 % of Sales 9.7% 8.3% 8.6% Net Income $19.4 $251 $ 33.6 Diluted EPS”) $ 94 $1.18 $ 1.56 EBITDA” $ 42.1 $53.3 $ 69.7 (1) 2004 results were impacted by charges related to Ii and reduced net
Slide 28: Results By Segment
Results By Segment prev/ Year Ended December 31, Net sales RV Segment $ 347.6 $447.9 MH Segment $ 183.3 $221.3 Operating Profit RV Segment $ 31.8 $ 41.7% MH Segment $ 18.50 $ 24.0 Operating Profit as a Percentage of Net Sales RV Segment 9.2% 9.3%" MH Segment 10.1% 10.8%” (a) After $0.4 million charg
Slide 29: Operating Results
Operating Results Three Months Ended March 31, Sales $154.5 Operating Profit $10.4 % of Sales 6.8% Net Income $ 58 prev! Financial Performance Diluted EPS") $ 0.27 (a) 2005 quarterly results were impacted by charges related to litigation that reduced operating profit by $2.2 million and decreased ne
Slide 30: Results By Segment
Results By Segment prev/ Three Months Ended March 31, Net sales RV Segment MH Segment Operating Profit RV Segment MH Segment Operating Profit as a Percentage of Net Sales RV Segment MH Segment (a) After $0.4 million charge related to litigation, net of reduction in incentive compensation. (b) Afier
Slide 31: Reconciliation of Operating Profit to EBITDA
prev! Reconciliation of Operating Profit to EBITDA Operating Profit $ 34.3 $44.0 $ 57.7 $ 65.0 Depreciation and $ 7.8 $ 9.3 $ 12.0 $ 12.9 Amortization EBITDA $ 42.1 $53.3 $ 69.7 $ 77.9 (1) See press release dated February 15, 2006 for a reconciliation to consolidated results (2) See press release da
Slide 32: Balance Sheet
Balance Sheet prew Total assets $160 $ 238 $ 307 $ 333 Total debt $ 42 $71 $ 73 $ 81 Stockholders’ equity $ 94 $122 $ 168 $ 180 RATIOS Days sales in accts receivable “ 19days 21days 21days 19days Inventory turns 7.3turs 5.6turns 6.1turns 6.5 turns (1) Days sales in accounts receivable is the most re
Slide 33: Financial Strength
Financial Strength Return on Equity" 24% 24% Return on Assets" 11% 13% Total Debt to Equity 0.7 0.4 Total Debt to EBITDA ® 1.3 0.8 23% 12% 0.6 1.3 24% 12% 0.4 1.1 (1) Based on income from continuing operations, in 2002 and 2003 (2) EBITDA is operating profit plus depreciation and amortization.
Slide 34: Peer Comparison
Peer Comparison prew Fleetwood (FLE) NIA -1% -32% Monaco (MNC) 72.9 3% 2% Spartan (SPAR) 22.6 7% 12% Thor (THO) 20.0 15% 23% Winnebago (WGO) 17.5 12% 23% Source: Capital 1Q, May 1, 2006, except forward P/E, which is provided by Thomson Financial and is based on fiscal 2007 analyst projections.
Slide 35: Summary
Summary prev/ = Why is Drew a Good Investment Highly experienced and motivated management Outstanding customer service Low-cost producer Continued product line expansion History of successful strategic acquisitions History of strong operating profit and cash flow Strong Balance Sheet Highly experien
Slide 36: Thank You
Thank You Avondale Partners, LLC: Kathryn Thompson (615) 467-5637 BB&T Capital Markets: John Diffendal (615) 340-8284 Sidoti & Company LLC: Scott Stember (212) 453-7017 Susquehanna Financial Group, LLLP: Jennifer Bullard (610) 617-2856 Leigh J. Abrams, President and CEO 914-428-9098 leigh@drewindust