Patrick Industries, Inc. · NASDAQ:PATK
Patrick Industries — Investor Presentation (August 2018)
36 slides from Patrick Industries's investor presentation, Aug 27, 2018
Slide 1: Investor Presentation August 2018
Investor Presentation August 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain statements related to future results or states our intentions, beliefs and expectations or predictions for the future which are forward- looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. T
Slide 3: Company Overview
Company Overview
Slide 4: Company Snapshot
Company Snapshot Founded in 1959 Key component manufacturer and supplier to the RV, Marine, Housing and Industrial Markets Headquartered in Elkhart, Indiana Q2 2018 LTM Operates over 110 facilities revenue of in the U.S., China and The Netherlands $2.0B Listed on the NASDAQ under 8,000 team members
Slide 5: Market Platform
Market Platform Lifestyle & Leisure Travel Trailer, Fifth Wheel, Folding Pontoon, Fiberglass, Trailer, Class A, B, C Ski & Wake, Aluminum RV Marine 67% 10% of Q2 YTD 2018 sales of Q2 YTD 2018 sales MH Industrial 11% 12% of Q2 YTD 2018 sales of Q2 YTD 2018 sales Manufactured Housing, Modular Resident
Slide 6: Patrick Facility Profile
Patrick Facility Profile Nationwide Network Strategically aligned with OEM customers Over 110 manufacturing and distribution facilities Indiana facilities Headquarters Patrick Facility *There is one manufacturing facility located in China that was part of the November 2017 LMI acquisition and on
Slide 7: Industry Fundamentals
Industry Fundamentals
Slide 8: Economic Fundamentals
Economic Fundamentals Solid trends in macro economic fundamentals in 2017 and first half of 2018 signal continued positive outlook in our industries Favorable Economic Fundamentals Unemployment Rate Strong consumer confidence Relatively low interest rates Lower, stable fuel prices Credit ava
Slide 9: Population Demographic Trend
Population Demographic Trend A key trending population demographic in the industries we serve began to increase in 2017 indicating future market upside potential in all of our markets 50,000 Key population demographic begins to decline 48,000 Key population demographic is poised to return to growth
Slide 10: Industry and Market Review: Lifestyle & Leisure
Industry and Market Review: Lifestyle & Leisure
Slide 11: Demographic Trends – Lifestyle & Leisure
Demographic Trends – Lifestyle & Leisure 49% of the US population 65% participated in participated in an outdoor activity in 2017 Camping or Boating activities in 2017 Outdoor Participation Outdoor Participation # of participants in millions 49% 49% by Activity - 2017 48% 48% 146 Camping All Other 2
Slide 12: Market Overview: RV Market
Market Overview RV Market Favorable demographic trends along with growing camping activity indicate future growth in the RV market Favorable Growing Demand Demographic Camping by Age Group Trends Activity . 40% of all campers are . RV Demand by Age Group 38.6 million North American Aged millennials
Slide 13: Industry Outlook: RV Market
Industry Outlook RV Market +3% annual RV Wholesale Unit Shipments growth (shipments in thousands) 551 505 9/11 Attacks 431 +22% 391 384 374 370 353 Residential +24% Housing Crisis 357 Gulf War 321 311 321 321 293 +21% 286 259 255 300 247 248 242 228 237 216 257 252 203 188 173 163 166 1988 1989 1990
Slide 14: RV Retail Shipments
RV Retail Shipments RV Market RV Retail Growth and Re-Statement Annual retail growth in 2017 was 13% compared to initially reported rate of 5% 21% 19% 16% 16% 14% 14% 14% 13% 13% 13% 12% 12% 12% 10% 10% 10% 8% 7%-10% E 7% 11% 8% 8% 3% 7% 6% 2% 5% 4% 4% 5% 4% 1% 5% 3% 5% 3% 4% 4% 3% -2% Jan Feb Mar A
Slide 15: Market Overview: Marine Market
Market Overview Marine Market Favorable demographic trends along with growing outdoor activity indicate future growth in the marine market Statistics Outdoor Recreational Trends Influencing Lifestyle the Market . 36% of the US adult . Continued core recreational . Average age of registered populatio
Slide 16: U.S. Marine Outlook
U.S. Marine Outlook Marine Market Industry Volume 600,000 500,000 Average age of a used boat 400,000 is approximately 25 years +5% 300,000 annual 1965-1991 growth Average 401,000 200,000 1992-2006 Average 306,000 100,000 - 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 19
Slide 17: Industry and Market Review: Housing & Industrial
Industry and Market Review: Housing & Industrial
Slide 18: Economic and Housing Outlook
Source: Source: National Association Realtors (Aspiring of Home Buyers & Profile Economic and Housing Outlook) Updated and Harvard Ho a home in the future in 2017 non Approximately Demographic Trends - homeowners desired to own 1980 1981 1982 1983 80% 1984 Interest Mortgage & Average Homeownership 1
Slide 19: Growing Housing Demand
Source: Source: U.S. Census, NAHB, MHI GrowingHousing Demand 1990 75% 25% 1990 1991 83% 17% 1991 1992 86% 14% 1992 1993 87% 13% 1993 1990 1990 1994 82% 18% 1994 1995 79% 21% – 1995 – 2007 2007 1.5M Average= MH Shipments as a % of Single Family Single of % a as Shipments MH 2000 2000 Average= 25% 199
Slide 20: Market Overview: MH Market
Market Overview MH Market The MH market provides innovative, high-quality, affordable homes and is an excellent alternative to the traditional “stick” built home Statistics Affordable Form of Manufacturing Home Ownership . Approximately 9 million . Average structure cost . Flexible production househ
Slide 21: Industry Outlook: MH Market
Industry Outlook MH Market (shipments in thousands) MH Wholesale Unit Shipments 193 +15% annual 168 growth 147 141 118 131 131 96 93 124 81 82 +10% 71 60 64 annual 50 50 52 55 growth MH Units MH % of Single Family Home Starts The MH industry continues to perform at historical lows reflecting the res
Slide 22: Market Overview: Industrial Market
Market Overview Industrial Market The industrial market provides an excellent growth segment, allowing us to bring our high-quality, innovative product lines to both the residential and non- residential industrial markets Patrick Sales Commercial & Residential Housing Composition Institutional Fixtu
Slide 23: Industry Outlook: Industrial Market
Industry Outlook Industrial Market Diversification and Annual New Housing Starts (starts in thousands) Adjacent Markets 2,500 Leverage our manufacturing and 2,000 +5% distribution annual growth capabilities, 1,500 geographic footprint and product 1,000 expertise to 500 penetrate adjacent markets and
Slide 24: Strategy
Strategy
Slide 25: Capital Allocation Strategy
Capital Allocation Strategy Our capital allocation strategy is centered around the utilization of a balanced leverage position, strong cash flows and capital resources to grow and reinvest in the business model Capital Stock Debt Acquisitions Expansion Expenditures Repurchases Reduction . . Execute
Slide 26: Acquisition Execution
Acquisition Execution Demonstrated ability to source, acquire and integrate while increasingly executing on opportunities across diverse end-markets Acquisition Momentum Acquisition End-Market Mix ($ in millions) $258MM Avg. Revenues Acquired $59MM Avg. Revenues Acquired . Commitment to expanding pr
Slide 27: Geographic and Product Expansion
Geographic and Product Expansion Focus on expansion opportunities with $250MM market potential Targeted Product Lines: . Lamination . Solid Surface . Aluminum . Hardwood Products . FRP . Pressed Products . Fiberglass . Interior Doors . Paint . Plastics . Shower Doors . Bath & Closet Systems 1 PACIFI
Slide 28: Capital Expenditures
Capital Expenditures ($ in millions) We will continue to invest in our infrastructure to drive efficiency and capacity and flex our capital spend when necessary to align with our demand levels Annual Capital Spending $25-$30 $22.5 $15.4 $8.7 $7.9 $8.0 $6.5 Maintenance capex $4.2 approximately $5MM $
Slide 29: Leverage Capacity
Leverage Capacity We expect to continue to utilize and maintain a disciplined leverage position and our cash flows in alignment with our capital allocation strategy and financing covenants Leverage Ratio 5.0 (1) 4.0 $249MM of $258MM of Acquisitions & Acquisitions & $30MM of $17MM of $72MM of $139MM
Slide 30: Performance
Performance
Slide 31: Outperforming End-Market Growth
Outperforming End-Market Growth ($ in millions) In recent years, Patrick’s sales growth has outpaced industry growth in all four of our primary markets RV Marine MH Industrial 5-year CAGR 3-year CAGR 5-year CAGR 5-year CAGR Patrick: 30% Patrick: 143% Patrick: 20% Patrick: 29% Industry: 12% Industry:
Slide 32: Organic and Strategic Growth
Organic and Strategic Growth Strong sales growth continues to be evident and reflects organic and strategic impact leading to more balanced and diverse end-markets Sales Growth Trends Revenue Mix Average annual organic growth of 17% 2% 14% 15% 12% 12% 11% 11% 12% 11% 12% 4% 13% 11% 17% 14% 16% 15% 1
Slide 33: Margin Expansion
Margin Expansion ($ in millions) Consistent growth and improvement in gross and operating margins 17.1% 16.5% 16.6% 16.1% 15.0% 15.3% 14.4% $279 10.7% $202 7.6% 7.4% 7.5% 6.8% 7.0% 6.2% $152 4.4% $119 $122 $91 $91 2.3% $66 $70 $51 $44 $13 $41 $30 $6 $27 2010 2011 2012 2013 2014 2015 2016 2017 Gross
Slide 34: Sales & Earnings Growth
Sales & Earnings Growth ($ in millions except per share data) Sales Growth Earnings Growth 2013 – 2017 2013 – 2017 CAGR = 29% CAGR = 37% $4.50 +43% $2,040 $3.48 +34% +34% $112 $2.43 $1,636 +42% 54% +29% $1.81 +33% +11% $86 $1.27 $1,222 $0.99 +25% 32% +24% $920 +38% $56 +36% $736 +28% $42 +13% $595 $
Slide 35: Steady Increase In Content Per Unit
Steady Increase In Content Per Unit $8,000 $8,500 MH Content per Unit $2,520 (Calculated on a TTM Basis) $2,084 $1,790 $1,827 $1,585 $1,592 Our focus on strategic acquisitions and organic growth have resulted in significant increases in our content per unit and sales outpacing our respective marke
Slide 36: Patrick Industries, Inc.
PATRICK INDUSTRIES, INC.
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