LCI Industries · NYSE:LCII
LCI Industries — Drew Industries — Investor Presentation (November 2006)
36 slides from LCI Industries's investor presentation, Nov 7, 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 ) 2003
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: About Drew Industries
About Drew Industries A leading national manufacturer of quality components for Recreational Vehicles (RV) and Manufactured Homes (MH)
Slide 4: Company Overview Financial Performance
Company Overview Financial Performance Headquartered in White Plains, New York – 10 employees 46 manufacturing facilities in the U.S. and 1 facility in Canada Approximately 4,500 employees nationwide Organic growth from 2001 through 9/30/06 was well over $200 million or a 10% average annual growth,
Slide 5: Drew's Companies
Drew’s Companies Kinro, Inc. – Acquired 1980 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 Chassis and chassis parts for RVs and MHs Slide out mechanisms for RVs Leveling devices fo
Slide 6: Drew's Segments – LTM 9/30/06
MH = $25 million 34% RV = $48 million 66% MH = $238 million 31% RV = $534 million 69% Drew’s Segments – LTM 9/30/06 Revenues - $772 million 90+% of RV revenues are for towable RVs Segment Operating Profit - $73 million
Slide 7: Drew's Products
Drew’s Products RV Chassis and Chassis Parts: $230 million MH Chassis & Chassis Parts: $92 million MH Windows, Doors & Screens: $96 million RV Windows & Doors: $126 million 12 Months Ended September 30, 2006 Sales - $772 million Other: $17 million MH and RV Bath Products: $20 million Specialty Trail
Slide 8: Supplier to Industry Leaders
Supplier to Industry Leaders Outstanding customer service and national coverage , with 47 production facilities (approximately 3 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 (NYSE: SKY) RV
Slide 9: Business Strategy
Business Strategy 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 highly efficient factori
Slide 10: Content Per Vehicle - RV
Content Per Vehicle - RV Peak potential is $2,400 to $2,700 per RV Operating profit margin 11.3% 6.8% 8.6% 9.4% 11.3% 9.2% (a) 9.6% (a) 9.1% (a) (a) Margin since 2004 impacted by increases in steel and other material costs. (b) Excludes sales of specialty trailers, as well as Emergency Living Units
Slide 11: Content Per Home - MH
Content Per Home - MH Peak potential is $2,900 to $3,200 per home Operating Profit margin 15.5% 9.8% 10.8% 11.0% 10.7% 10.1% (a) 10.2% (a) 10.4% (a) (a) Margin since 2004 impacted by increases in steel and other material costs, as well as an adverse jury award, and subsequent settlement in a work pl
Slide 12: New Product Introductions
(in millions) New Product Introductions Annualized sales of these products increased from about $60 million in the 3rd quarter of 2005.
Slide 13: Acquisition Criteria
Acquisition Criteria Drew is a disciplined and patient acquirer Target less than 6 times pro forma EBITDA Immediately accretive Complementary to our core RV and MH markets Strategic Acquisitions Seek to acquire products or technologies that we can introduce through our nationwide customer base and f
Slide 14: Acquisition History
Acquisition History Strategic Acquisitions June 2006 Happijac Bed lifts for “toy haulers”. Annualized sales of $15 million 2001 Better Bath Bath and shower products for MH. Annual sales of $20 million July 2003 LTM Manufacturing Slide-out mechanisms, specialty slide-out storage trays and decks, and
Slide 15: 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 programs I
Slide 16: Investments
Investments Kinro and Lippert have extensive R&D departments Since January 1997: Invested over $149 million in plant and equipment Invested approximately $170 million for acquisitions Invested $40 million for stock repurchases at an average price of $5.37 per share These investments have been accret
Slide 17: RVs - Industry Wholesale Shipments
RVs - Industry Wholesale Shipments (Thousands of Vehicles) 90+% of Drew’s current RV product sales are for Travel Trailers and 5th Wheel RVs (1) Includes approximately 13,500 RVs purchased by FEMA for emergency housing for 2004 hurricane victims. (2) Excludes 39,000 ELU’s in 2005 and about 65,000 EL
Slide 18: RV Market: Towable RVs and Motorhomes
TOWABLE RVS (90+% of Drew RV revenues) MOTORHOMES RV Market 84% of industry 2005 unit sales 46% of wholesale dollar sales Retail cost $4,000 to $100,000 per unit. Average about $25,000 16% of industry 2005 unit sales 54% of wholesale dollar sales Retail cost $41,000 to $400,000+ per unit. Average ab
Slide 19: Growth In RV Market
Growth In RV Market Positive Demographic Trends Primary owners of RVs are 50 and over According to census projections, there are expected to be 20 million more people over 50 by 2014 Strong Growth Prospects Industry Advertising Campaign Target Market 30 and over Post 9/11 security concerns and high
Slide 20: How RVs Are Used
How RVs Are Used Shift in U.S. culture toward more RV-related activities NASCAR events College and NFL football games More economical family vacations Typical RV family vacation up to 74% less expensive Strong Growth Prospects Many RVs are “parked”over the long-term Historically, travel trailer sale
Slide 21: MH - Industry Production
47% 61% 59% 52% 49% 49% 47% 47% 75% 70% 65% 78% 74% 79% 62% 64% MH - Industry Production (Thousands of Homes) (1) (1) Includes approximately 3,500 (in 2004) and 20,000 (in 2005 and LTM 8/06) MHs purchased by FEMA for emergency housing for hurricane victims. (1) (1) Drew’s MH segment remained profita
Slide 22: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market Cost per sq. ft. is $36 for MH vs. $86 for site-built homes Average retail price of $68,000 for a 1,625 sq. ft. MH 10 million manufactured homes across the U.S. Strong Growth Prospects Improved quality, appearance and safety Studies have shown that MH built since 199
Slide 23: MH: Industry Trends
MH: Industry Trends Low inventory levels at retail dealers Slowing of repossessions Conventional financing now more common than chattel financing Improved industry lending practices should lead to fewer repossessions Berkshire Hathaway acquired Clayton, Oakwood, Southern Energy and 21st Mortgage; ra
Slide 24: MH: Strong Future
MH: Strong Future Baby Boomers retire and relocate to warmer climate Affordability Home appreciation due to greater ownership of land along with home Possible rebuilding of hurricane-damaged areas during late 2006 and 2007 Improved industry image Industry wide Advertising Campaign needed Strong Grow
Slide 25: Drew's Ownership and Governance
Drew’s Ownership and Governance Ownership by Executives and Directors: Currently own 16% Filed Form S-3 on October 3, 2005. All insider sales are complete except for one Director. After his sale, insiders ownership will be 13%. Drew’s Corporate Governance Program – ranked in the 97 th percentile of
Slide 26: Financial Performance: Stock Price History
Financial Performance The price of Drew’s common stock is about 8 times the price as of December 31, 2000 Drew has 21.6 million shares outstanding and a market capitalization of about $550 million (December 31 unless noted) Stock Price History Drew effected a 2-for-1 stock split on 9/7/05 to holders
Slide 27: Operating Results – Year Ended December 31
($ in millions, except EPS) Operating Results Year Ended December 31, Financial Performance (1) 2004 results were impacted by charges related to litigation. Operating profit was reduced by $1.5 million which reduced net income by $0.9 million, or $.04 per diluted share. (2) 2005 results were impacte
Slide 28: Results By Segment
($ in millions) Results By Segment Year Ended December 31, Financial Performance (a) After $0.4 million charge related to litigation, net of reduction in incentive compensation. (b) After charges related to litigation, net of reduction in incentive compensation, of $1.5 million in 2004 and $0.8 mill
Slide 29: Operating Results – Nine Months Ended September 30
($ in millions, except EPS) ($ in millions, except EPS) 200 5 (a) 200 6 Sales $ 318 $ 410 + 2 9 % Operating Profit $ 2 5. 6 $ 35 . 4 + 38 % % of Sal es 8 . 1 8 . 6 % Net Income $ 14.5 $ 2 0 . 4 + 41 % Diluted EPS ( b ) $ 0 . 68 $ 0 . 93 + 37 % Operating Results Nine Months Ended September 30, Financ
Slide 30: Results By Segment – Nine Months
($ in millions) Results By Segment Nine Months Ended September 30, Financial Performance ( a) After $0.4 million charge related to litigation, net of reduction in incentive compensation. (b) After $0.8 million charge related to litigation, net of reduction in incentive compensation. (c) After $0.6 m
Slide 31: Operating Results – Three Months Ended September 30
($ in millions, except EPS) Operating Results Three Months Ended September 30, Financial Performance (a) Adjusted for 2-for-1 stock split on 9/7/05. (b) 2005 results were impacted by the reversal of charges related to litigation. Operating profit was increased by $1.0 million, which increased net in
Slide 32: Reconciliation of Operating Profit to EBITDA
($ in millions) Reconciliation of Operating Profit to EBITDA Financial Performance (1) See press release dated October 31, 2006 for a reconciliation to consolidated results.
Slide 33: Balance Sheet
($ in millions) 12/31/03 12/31/04 12/31/05 9 /3 0 /06 Total assets $ 160 $ 238 $ 307 $ 3 45 Total debt $ 42 $ 71 $ 73 $ 79 Stockholders’ equity $ 94 $ 122 $ 168 $ 1 9 9 RATIOS Days sales in a ccts receiva ble (1) Inventory turns (2) 19 days 7.3 turns 21 days 5.6 turns 21 days 6.1 turns 20 days 5. 5
Slide 34: Financial Strength
12/30/02 12/31/03 12/31/04 12/31/05 LTM 9 /06 Return on Equity (1) 24% 24% 23% 24% 2 1 % Return on Assets (1) 11% 13% 12% 12% 1 1 % Total Debt to Equity 0.7 0.4 0.6 0.4 0. 4 Total Debt to EBITDA (2) 1.3 0.8 1.3 1.1 1. 0 Financial Strength Financial Performance ( 1) Excludes discontinued operations o
Slide 35: Peer Comparison
17% 10% 13.8 19.6 Spartan (SPAR) 9% 2% 22.7 N/A Fleetwood (FLE) 24% 13% 12.8 15.2 Drew (DW) ROE ROA Forward P/E Trailing P/E 2% 3% 24.8 69.5 Monaco (MNC) 26% 18% 12.5 14.6 Thor (THO) 15.6 24.2 Winnebago (WGO) 20% 10% Peer Comparison Source: Capital IQ, October 30, 2006, except forward P/E, which is
Slide 36: Thank You
Analyst coverage: For more information contact: Or visit: www.drewindustries.com 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: Cheryl Cortez (
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