Patrick Industries, Inc. · NASDAQ:PATK
Patrick Industries — Investor Presentation (November 2015)
42 slides from Patrick Industries's investor presentation, Nov 30, 2015
Slide 1: Investor Presentation November 2015
PATRICK INDUSTRIES, INC. Investor Presentation November 2015 ——— as NASDAQ: PATK
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: Patrick Industries brands and subsidiaries
PATRICK INDUSTRIES, ING aa Caw cE | @PolyDyn* ~~ Qsccon] mR an Gravure ink @ & PARRICK
Slide 5: Company history and acquisition highlights
pital from ma} Inc. ~the largest, reholder and cor acquisition in the Refina MM 2 (11/14),t0 ‘Company/s.history.(5/02) Credit v Welle an rovth and ecquistion pl (ft Company taken public (wasp) ste ‘common stock sl 5/35) 2011 credit ‘Announces Stock Repurchase Plan (2/13) led by JPMorgan with increas
Slide 6: Patrick Industries Fact Sheet
Patrick Industries Fact Sheet Leading national manufacturer and supplier of building and component products to the RV, MH & Industrial markets Headquartered in Elkhart, Indiana — the “RV Capital of the World” 41 manufacturing and 16 distribution centers 3,800+ employees Strong customer relationships
Slide 7: Facilities located in Indiana to serve RV OEMs
> Square footage (as of November 2015) - owned (1.8M); leased (2.2M) Majority of Patrick's businesses are strategically located in Indiana to serve the major RV OEMs + Approximately 85% of all RVs manufactured in the U.S. in 2014 were produced in Indiana. + Close proximity to RV OEMs enables just-in
Slide 8: The RV Market
Slide 9: RV Market Quick Facts
RV Market Quick Facts 2005 ~«2OH H# of U.S. RV-owning households 7.9 milion 8.9 milion lAverage age of typical RV owner 49years 48 years Median income of RVers $62,000 lOwnership rates: 35-54 years (fastest growing segment) 90% 11.2% 55 years of older (highest rate of RV ownership) 86% 9.3% RV OEMs
Slide 10: RV Market Indicators
RV Market Indicators Drivers of Consumer Demand Market Growth ‘Number of aging “Baby PS B00mers” PATK Sales Mix by Industry confidence 1 - industry reports indicate that RV dealer inventory levels continue to be in line with retail demand. Given favorable demographic trends, the RV industry has a po
Slide 11: RV Industry Annual Shipment Trends
RV Industry Annual Shipment Trends The RV industry has experienced steady growth over the last five years following a 58% decline in unit Shipments during the period of 2006-2009. While past major cycle downturns were surrounded by major economic and global events, trended shipment levels indicate t
Slide 12: Patrick RV Content Per Unit
ContentPer Unit($) Patrick RV Content Per Unit RV content per unit has increased consistently with our acquisition and organic growth over the Jast 5 years. We estimate total RV content available in the current product lines that we sell of over approximately $5,600 per unit. $’s Sold / RV Unit Ship
Slide 13: The MH Market
Slide 14: MH Market Quick Facts
MH Market Quick Facts = Average structure cost per sq. ft. (2014): $45 (MH) vs. $97 (single family home) * Average MH retail price (2014): $65,300 for 1,440 sq. ft. = Multiple exterior options and interior floor plans available; customized to meet consumer needs = Engineered for wind safety and ener
Slide 15: MH Market Indicators
MH Market Indicators — Drivers of Consumer Demand Market Growth es fences ordabilityand PATK Sales Mix by Industry f \ ‘Number of aging "Baby ‘Consumer Demand * Opportunity for moderate year-over-year growth; limited downside risk in near-term if volumes maintain historical relationship with new hou
Slide 16: MH Annual Shipment Trends
MH Annual Shipment Trends The MH industry continues to perform at historical lows reflecting the residual impacts from the residential housing market crash including tight credit standards and lending. We believe, however that there is pent up demand being created and significant upside potential fo
Slide 17: Patrick MH Content Per Unit
Patrick MH Content Per Unit Our content per unit shipped has remained fairly consistent despite the impact of vertical integration in prior periods by our largest MH customer. We believe we are well-positioned to participate in the continued expected improvement of this industry. We estimate total M
Slide 18: The Industrial Market
The Industrial Market
Slide 19: PATK Sales Mix by Industry
PATK Sales Mix by Industry Consumer Demand I» 50% ofthe Company's industrial revenue base's ted directly tothe residertel housing market (new consiucion and remodel). = Our sales to the industrial market generally lag new residential housing starts by six to nine months, = Patrick has targeted certa
Slide 20: New Housing Starts Trends
New Housing Starts Trends We estimate that approximately 50% of our industrial revenue base is directly tied to the residential housing market which appears to have begun its recovery. Our products have applicability in both new construction and remodel markets. 2,500 2,000 1,500 1,000 New Housing S
Slide 21: Industrial Organic Growth
Industrial Organic Growth “ec Growing our legacy core product lines into adjacent markets outside of RV and MH continues to be part of our strategic growth plans. We will continue to concentrate in the residential cabinet and furniture, retail, commercial, hospitality and institutional markets, wher
Slide 22: Strategy Execution
Strategy Execution
Slide 23: Capital Allocation
Capital Allocation Our capital allocation strategy is centered around the utilization of our leverage and capital resources to grow the business model. — Acquisitions — Investments in infrastructure and capital expenditures — Debt reduction & leverage position + Weexpect to utilize availability unde
Slide 24: Acquisition Strategy
Acquisition Strategy We target organizations with: + Solid management teams with strong customer and supplier relationships and operational talent + High quality product lines + Strong growth potential + Strategic value proposition to our business model Patrick provides the acquired businesses with:
Slide 25: Acquisition Summary by Year (2010-2015)
Acquisition Summary by Year 2010 - 2015) Acquisitions continue to be a part of our strategic growth plan as we have acquired an average of ‘over $134MM of annualized revenues in each of the past 3 years. In 2015, we have acquired approximately $233MM of annualized revenues. 2010 Acquisition Highligh
Slide 26: North American Acquisition
North American Acquisition In conjunction with our capital allocation strategy and related strategic growth initiatives, we acquired two high quality companies in early September that afford us the opportunity to increase our content per unit and allow for the introduction of new and innovative prod
Slide 27: Reinvesting in the Business - Capital Expenditures
Reinvesti $16,000 ng in the Business - Capital Expenditures We will continue to invest in our infrastructure and flex our capital spends where necessary to align with our demand levels. 12,000 7 s10.60s $10,000 se.000 |“ so | amt $8036 Hi $4,000 38.669 5785 $8,000 Recession | $12,008 ae sea 37480 se
Slide 28: Stock Buyback
m7 a ‘Stock Buyback (000's) Stock Buyback Since the inception of the stock buyback program in February 2013 through September 2015, we have repurchased a total of 1,323,870 shares at an verage cost per share of $19.38 - 51% below the September 27, 2015 closing stock price of $39.74, 100 1400 1200 19
Slide 29: Capital Allocation
Capital Allocation Since year-end 2009 through Q3 2015 YTD, we have allocated approximately $334 million in the aggregate of capital to acquisitions, capital spending and stock buybacks, while only increasing debt by $183 million. (sinmition $400 $350 $300 $250 $200 ($151) $150 $100 $50 $0 ProForm S
Slide 30: Balance Sheet Strength
Balance Sheet Strength We expect to, and continue to utilize our leverage for strategic acquisitions, followed shortly thereafter by an accelerated deleverage cycle based on strong operating cash flows. We are confident in our ability to size the business model according to the revenue stream based
Slide 31: Shareholder Value
Shareholder Value The execution of our strategic initiatives has resulted in an approximate 3,100% return to shareholders during the period of 2010 - October 31, 2015, Monthly Closing Stock Price Trend son sn | sso | gen pee | i 2 52000 ae | © $15.00 z 2223233 $10.00 aaa ee so gpdsesggaa3d ill it ie
Slide 32: Stock Performance
Stock Performance As of October 31, 2015, our split-adjusted closing stock price was $40.58, approximately 92% of our pre-split closing stock price of $43.98 on December 31, 2014, and generating a 38% total shareholder return over that time period. Split Adjusted Stock Performance $50.00 $45.00 $40.
Slide 33: Financial Performance
Financial Performance
Slide 34: Sales / Net Income / Diluted EPS Summary
Sales / Net Income / Diluted EPS Summary (Reported) 2012 — 9M “15 (Sin mitions $00 $100 $437 mz $595 m3 Sales $736 1 | | awa omras Net Income (Stnmitons) TT $35.0 $30.0 $25.0 $20.0 $150 $100 $50 soo Diluted EPS (porshare) T $195 200 ~ ge = ms | 1.49 5 $150 i F $100 3050 | $0.00 m2 13a MAM.
Slide 35: Sales / Net Income / Diluted EPS Summary (Adjusted)
Sales / Net Income / Diluted EPS Summary (Adjusted) 2012 - 9M ‘15 (Sinnition) Net Income - Adjusted* (Sinmilions) Sales 0.8. 30.7 $30.2 $800 $736 $30.0 $23.6 33.4 $672 oO 7 $700 — $20.0 $595 l 1 $600 $546 $10.0 $0.0 $500 2012 2013 2014 914 M15 $400 Diluted EPS - Adjusted* $300 (ber share) cise on $2
Slide 36: TTM Gross and Operating Margin Improvement
TTM Gross and Operating Margin Improvement Our gross and operating margins have continued to increase driven by increased sales volume, leveraging our fixed costs and strategic acquisitions. TIM Gross and Operating Margins ° = Mmmccocs rg Opeating Ncome Gross Magn SS Operating Marg %
Slide 37: Investor Contacts
Investor Contacts ‘Andy Nemeth Chief Financial Officer (574) 294-7511 nemetha@patrickind.com Julie Ann Kotowski Director of Investor Relations (574) 294-7511 kotowskj@patrickind.com Analyst Coverage CJS Securities Daniel Moore dmoore@cjs-securities.com CL King & Associates Scott Stember sstember@clk
Slide 38: Appendix
Slide 39: Acquisition Summary (2010 - 2015)
Acquisition Summary (2010 — 2015) eg a re 01/2010 Quality Hardwoods Sales $2.0MM. S2MM | Manufacturing, RV Cabinet Doors, Wiring, electrical, plumbing, and 8/2010 __blazoninternationalGroup sag 0 MM__ Distribution _RV&.MHK_otherbulldingproducts aa Paintedcountertops, foam 06/2011 ThePraxisGroup $05M
Slide 40: Acquisition Summary (2010 - 2015) (continued)
Acquisition Summary (2010 -— 2015) (continued) pee es wee feeemenen ens Sep-13, =>) $5.2MM ‘$15MM Manufacturing Industrial and showers: @ eT ‘ een los bre ewer | gre Lime | ow fe © = gw Favcnet wanton poaas ar + mee Eearee omer ein faerie | concn | carn [meee | oy Et — ane ‘ eens ross fate | cer | a
Slide 41: Acquisition Summary (2010 - 2015) (continued)
Acquisition Summary (2010 -— 2015) (continued) Se ee ee Febeis May-15 septs appar Better Way Partners, LLC $40.5 MM Structural Composites of. Indiana, ne. 201MM North American s35.0Mm + projectedAnnualzedSsiesarottheacqustiondate ssomm sismm sues MM Segment Manufacturing Manufacturing Manufacturing
Slide 42: Supplementary Schedules
Supplementary Schedules Reconciliation of GAAP Net Income/Diluted EPS to Adjusted Net Income/DilutedEPS (8 in thousands) 2012 2013 2014 9M'14 9M 15 [Reported net income (GAAP) $23.005[$ 240a0|s sos74|s z3.s81|s 20183 [Adjustment factors. ‘Write-off unamorized discount on Subordinated notes 5 E = E z
Patrick Industries — Investor Presentation (November 2015) on 6ix