LCI Industries · NYSE:LCII
LCI Industries — Investor Presentation (March 2017)
48 slides from LCI Industries's investor presentation, Mar 14, 2017
Slide 1: | INDUSTRIE
Ig) | INDUSTRIE lippertcomponents.com
Slide 2: Company values
passionate about %& a o Pr winning? team play with trust 4) 35 honesty - integrity#candor + caring about ms people 5 Lcl INOUSTRIES
Slide 3: Watch the video
Ig) ap atch the video
Slide 4: 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 5: Management Team
' } JASON LIPPERT, CEO 20+ years with LCI Industries Ler INDUSTRIES Management Team SCOTT MERENESS, PRESIDENT 20+ years with LCI Industries BRIAN HALL, CFO Average tenure of LCI’s members of senior managementis 14+ years with the company Is
Slide 6: Financial Performance
>» Financial Performance Net Sales = OEMnet sales.” ‘Aftermarket net sales” — EBITDA” EBITDA $1,800 Faso $300 Net Sales and EBITDA (in mitiions) $1,600 $250 $1,400 $1,200 $200 $1,000 ‘$150 — $681 sooo ¢ $873 i $100 $400 $50 $200 $0 | $0 2010 2011 2012 2013 2014 2015 2016 (1) Priorto @2 2016 the Comp
Slide 7: Net sales by segment
OEM Towable $503 $660 $725 $836 $93 _ OEM Motorhome 30 OEM Adjacent Industries Aftermarket International Total $573 $681 $901 $1,016 $1,191 $1,403 $1,679 5) + Prior periods have been recast to confomm to the Company's new reportable segments. ge
Slide 8: Non-OEM Towable RV Net Sales
Non-OEM Towable RV Net Sales $700 $600 $500 $400 $300 $200 $100 $0 CAGR $597 27% 2010 2016 = OEM Adjacent industies = Aftermarket ™OEMRV Motorhome — International Sales for the year ended December 31, 2010 compared to the year ended December 31, 2016. Both periods exclude the Company's net sales of
Slide 9: Consolidated Sales Growth
Consolidated Sales Growth Sales for the twelve months ended December 31 for each year unless noted a) ») ° ¢) 2014 2015 2016 Sales for acquisitions represent the trailing twelve month sales at the date of acquisition. Any post- acquisition changes included in organic orindustry accordingly. Organic
Slide 10: OEM and Aftermarket Industries
OEM and Aftermarket Industries Lcl INOUSTRIES
Slide 11: RVs - Industry Wholesale Shipments
» RVs - Industry Wholesale Shipments (Compared to LCl’s Performance) ingustY Approximately 71% 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 y $1,400 = No torhomes 700 Other Towables | $4,200 Travel Trailers &
Slide 12: RV Wholesale Shipments
> RV Wholesale Shipmen ag RV Shipments ze RV Shipments vs Federal 2 5 40 5 a 1\ Interest Rate = 5 es A\ 5 S Ay & ae We E om r\\ * 200 7 Bod ® 150 an * 100 an \_ SN * ea 5 ws \ 1% a - i ef £ & £ © 50% F a 7 150 “om Ae = + vas sud = a0 or 20% | A \ Fes fia VFN ZL) IS KA \ 2 We | A ACen WS NE Z— 7s 105
Slide 13: Product lines
Ole) = FURRION ‘SHOWERS ‘APPLIANCES & SINKS AWNINGS FURNITURE MATTRESSES FURRION \ \ } t ELECTRONICS ‘SLIDE-OUT es , MECHANISMS & | oo SUSPENSION oe = oJ ENHANCEMENTS
Slide 14: Manufacturing capabilities
Fabric and Electronics and Steel and Lamination Steel and Motion- Woodworking Plastic Forming Aluminum and Glass Aluminum Systems Fabrication Fabrication Welding
Slide 15: Towable RVs and Motorhomes
Towable RVs (Approximately 71% of LCl’s OEM Segmentn Motorhomes (Approximately 7% of LCI’s.. OEM Segmentnet sales) ee of industry 2016 unit sales of estimated 2016 wholesale dollar sales, or $10.9 billion Retail cost $4,000 to $100,000+ per unit. Average about $30,000 of industry 2016 unit sales of
Slide 16: Campers in the U.S.
(EE 59,, Tent Campers _ AB ff 275 ition @ \22» Active Campers — — RV Campers BP} 46.6 million: . 10.3 million , fr 18:, Cabin Campers = 8.4 million ll a) * Estimates based on 106 million households. All other (1%) 0.5 million. 60% Camp Every Year 28.6 million 10% Camp Every Other Year 48 million 30%
Slide 17: RV vacation value and demographics
Typical RV family vacation is 23 to 59 percentless expensive for a family of four 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 College and NFL football gam
Slide 18: RV Industry Trends
>» RV Industry Trends Units Travel Trailer and 5 Wheel RVs, LCI’s primary RV market a Wholesale Retail (Units in thousands) cadens 350 314 317 300 re ee 268 ps = ore) 251 226 Pe 223 199 206 200 185) 186 164 150 138 100 50 072007 2008 «= 2009/ss2010«S'ss2011«'s2012_s—“(iti OSC i014 2015 OT Estimated
Slide 19: Number of U.S. Households that Own an RV
> Number of U.S. Households that Own an RV (in Millions) 10 9 8 £ 6 = 4 a 2 = 1980 1984 1988 1993 1997 2001 2005 2011 es) Statistics provided by RV Consumer Demographic Profile — 2011 18
Slide 20: Demographics
>» Demographics Number of U.S. households that own an RV 7.9 million 8.9 million Household ownership rates of RVs 8.0% 85% Average age of all RVs 12.7 years 14.2years Average time consumers have owned their 6.6 years 8.4 years current RV Age of typical RV owner A? years A8 years Average income of RV
Slide 21: What's Next...
What’s Next... o Lcl INOUSTRIES International RV Innovation/R&D Aftermarket OEM Adjacent Markets + Acquisitions + Additional Addressable Market
Slide 22: International RV Markets
Slide 23: Research and Development
Slide 24: Aftermarket Opportunity
Slide 25: Marine, Bus, Truck, Fleet, Cargo
Marine Bus Truck Fleet Cargo
Slide 26: New Products & Acquisitions
Slide 27: Recent acquisitions
EA Technologies Glacho-depostion (e-coaP ond power Sota: rervices Signature Seating! elke actrees Flair Interiors Manufacturer of RV furniture and mattresses Atwood Seating & Chassis RV seating and chassis component operation of wood Mobile Product, a subsidiary of Dometic Group Total 105.4 [1] In J
Slide 28: Acquisition Discipline and History
Acquisition Discipline and History o Lcl INOUSTRIES Have made nearly 40 acquisitions over the past 16 years Weare experienced at successfully integrating acquisitions Acquisitions have come in the form of intellectual property, small start ups and larger businesses 7 out of last 12 acquisitions have
Slide 29: Expanding Our Growth Potential
> Expanding Our Growth Potential" Doors, Windows, Mattresses, Furniture and Awnings Furrion®) . . Travel Trailer Leveling Electronics Chassis and Axles Aftermarket Axles Eeeoroctit oe0 E Doors, Windows, Mattresses and Furniture ’ Marine Furniture J International (1) Amounts {in millions) represent M
Slide 30: Content Per New Towable RV
> Content Per New Towable RV + Approximately 71% of OEM Segment net sales are for Travel Trailer and Fifth-Wheel OEMs + 100% market share in existing products would yield an 4 yer estimated $7,400 per Towable RV, 41% penetration gsr? 50.967 $3022 07 - - + In 2016, Travel Trailer unit volume is up 14
Slide 31: Content Per New Motorhome RV
> Content Per New Motorhome RV + Approximately 7% of OEM Segment net sales are for Motorhome OEMs Ng 52,011 + 100% market share in existing products erate $2. would yield an estimated $6,000 per eee Motorhome RV, 34% penetration ccs a) ot Rew pone $1,227 $1,272 $201 Increase $330 Increase $208 Incre
Slide 32: Supplemental Schedules
Supplemental Schedules Lcl INOUSTRIES
Slide 33: Operating Results
> Operating Results Three Months Ended December 31 FINANCIAL PERFORMANCE 6 ions, except EPS) 2016 2015 Change Net Sales $ 402.9 $ 334.2 21% Operating Profit $ 406 $ 23.6 72% % of Sales 10.1% 7.1% Net Income $ 263 §$ 16.1 63% Diluted EPS 05] 3 Wren 62% (1) includ rance costs of $2.5 million forthe th
Slide 34: Operating Results
> Operating Results Years Ended December 31 FINANCIAL PERFORMANCE 6 ions, except EPS) 2016 2015 Change Net Sales $ 1,678.9 $ 1,403.1 20% Operating Profit $ 200.9 $ 1163 73% % of Sales 12.0% 8.3% Net Income $ 129.7 $ 74.3 74% Diluted EPS S G20) e102 72% everance costs of $3.7 million forthe year ende
Slide 35: Results By Segment
>» Results By Segment Three Months Ended December 31 FINANCIAL PERFORMANCE (Sin mi 2016 Net Sales: OEM Segment $ 372.6 $ 308.1 21% Aftermarket Segment 30.3 26a 16% Operating Profit: OEM Segment 36.8 22.3 65% Aftermarket Segment 3.8 3.8 1% Operating Profit as a Percentage of Net Sales: OEM Segment 9.
Slide 36: Results By Segment
>» Results By Segment Years Ended December 31 FINANCIAL PERFORMANCE (Sin mi 2016 Net Sales: OEM Segment $1,548.1 $ 1,300.1 19% Aftermarket Segment 130.8 103.0 27% Operating Profit: OEM Segment 180.9 105.2 72% Aftermarket Segment 20.0 14.7 36% Operating Profit as a Percentage of Net Sales: OEM Segmen
Slide 37: Debt Position
> Debt Position FINANCIAL PERFORMANCE Cash and Net Cash oat - r Investments (Debt) the Period 12/31/11 $ = $ 7 $ Zh $ 50 2S VA = 101) 100) 1 12/31/13 2 66 66 5 12/31/14 16 - (142) 107 12/31/15 50 12 (38)8) Al 12/31/16 0) 86 36l4) 49 (1) On December 20, 2012, the Company paid a special dividend of $2
Slide 38: Cash Flow
> Cash Flow ($ in millions) FINANCIAL PERFORMANCE Acquisitions (24) () $ 309 Capital expenditures 215 Dividends 207 Stock repurchases 2 Total $ 733 (1) Includes 2017 YTD acquisitions totaling $8.5 million, which includes Sessa Klein S.p.A. acquired in February 2017. 37
Slide 39: Operating cash flow
FINANCIAL PERFORMANCE = $33 $32 . * ° $37 $45 sa7 $42 $24 Operating cash flow from 2009 to present ($ in millions) (1} Cash dividend of $2.00 per share, or $47 million, declared in December 2013 and paid in January 2014,
Slide 40: Balance Sheets
> Balance Sheets FINANCIAL PERFORMANCE (S$ in million 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 12/31/16 Total Assets soll 3745 53. $ 544 $ 623 $ 787 Total Debt = = = 16 50 50 Cash & Investments Zi 10 66 = 12 86 Stockholders’ Equity 277 28413) 3144) 395. 43915) 55016) Days Salesin A/R'” 17 days 1
Slide 41: Financial Strength
> Financial Strength FINANCIAL PER ORMANCE (12 months ended) 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 12/31/16 Return on Equity 11% 13% 16% 17% 18% 26% Return on Assets 9% 10% 12% 12% 12% 18% Return on Invested Capitalt 20% 22% 28% 26% 25% 41% Total Debt to Equity 0.00 0.00 0.00 0.04 0.11 0.09 T
Slide 42: Reconciliation of Net Income to EBITDA
> Reconciliation of Net Income to EBITDA FINANCIAL PERFORMANCE (Sin ns) 011 1012 1013, Net Income § -30:1||$ 373 ||/$ “50.1 \($ 623 ||$ 743 |S 1297 Income Taxes 18.2 20.5 27.8 32.8 40.0 69.5 Interest Expense (0}e3) 0.3 0.4 0.4 Eo: ley Depreciotionss: 205 27 275 32.6 Nb 4.2 Amortization EBITDA. 69.1
Slide 43: Segment Net Sales and Operating Profit
| Segment Net Sales: OEM $ 6514 $ 8659 $ 9765 $ 1,127.0 $ 1,300.1 $ 1,548.1 in Aftermarket DoF 35.2 39.1 63.8 103.0 130.8 | Segment Operating Profit: | OEM $ A7.2 $ 56.1 $ 74.6 $ 88.7 $ 1052 $ 180.9 int Aftermarket 13 3.5 ie) 87 14.8 _ Severance s = = (3.7) Executive Succession s (1.5) (1.9) = = -42
Slide 44: Stock Price History
>» Stock Price History $120 $100 $80 $60 $40 $20 $o LCI Industries has 24.8 million shares outstanding and a market capitalization of approximately $2.7 billion as of February 28, 2017 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 + Dates noted above are as of Decem
Slide 45: Analyst Coverage
> Analyst Coverage a Citi Research > Gregory Badishkanian — (212) 816-2720 a CJS Securities > Dan Moore — (914) 287-7600 a” CL King & Associates > Scott Stember— (212) 364-1806 A Sidoti & Company > Stephen O'Hara — (212) 894-3329 ”~ Thompson Research Group > Kathryn Thompson — (615) 891-6206 CS)
Slide 46: Industry Statistics Summary: Towable RVs
Let industries Industry Statistics Summary TOWABLE RECREATIONAL VEHICLES (RV) ToT] SSS OS 1 COC 11 Denier Tverrony pe See F700. sre800 TEE Sar $2768 ——3. 753 5-20} it "2500 a Ter 0 3 2 Tor
Slide 47: Industry Statistics Summary: Motorized RVs
Let industries Industry Statisties Summary MOTORIZED RECREATIONAL VEHICLES (RV) TO] SSS OS 1 Cone 1 Dealer vernon pe cL “E300 xu a LEZ as er
Slide 48: Market Shift
Market Shift Share of new light-vehicle buyers by age 50% Birth years pu 1946- —~ 9 1964 30 1977- m 1994 © 1965- 20 1976 16 Before 1945 io} © 1995- 2010 ‘11 ‘12 13 ‘14 ‘15° 2014 *Through Nov. Source: J.D. Power THE WALL STRE JOURNAL.