Patrick Industries, Inc. · NASDAQ:PATK
Patrick Industries — Investor Presentation (September 2018)
37 slides from Patrick Industries's investor presentation, Sep 13, 2018
Slide 1: Investor Presentation September 2018
Investor Presentation September 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: Sales Composition
Sales Composition Market Platform Q1-18 Q2-18 RV – 69% RV – 65% Marine – 8% Marine – 11% MH – 11% MH – 12% Industrial – 12% Industrial – 12% 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 sale
Slide 6: Patrick Facility Profile
Patrick Facility Profile Nationwide Network Strategically aligned with OEM customers Over 110 manufacturing and distribution facilities Geographic concentration of RV, MH & Marine Geographic concentration of RV, MH & Industrial Geographic concentration of MH & Marine Headquarters Facility Geogra
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: Industry Trends: RV Market
Industry Trends RV Market Favorable Industry Trends Influx of younger, more diverse campers continue to build momentum for the North American outdoor, leisure lifestyle 77 million household campers in the U.S. 6 million new campers have started camping since 2014 83 million millennials in the U.S. 4
Slide 12: 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 13: RV Market Quarterly RV Retail Shipments
RV Market Quarterly RV Retail Shipments The RV retail market continues to show strong demand and growth Quarterly Retail Shipment Growth 7% 10% 17% 11% 2018 July YTD Retail 15% Growth Estimate = 7%-10% 18% 16% 2017 Retail Growth = 13% 9% 8% 13% 2016 Retail Growth = 11% Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
Slide 14: RV Retail Shipments: Growth and Re-Statement
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% 12% 12% 13% 12% 10% 10% 7%-10% E 7% 8% 8% 8% 11% 3% 8% 6% 7% 6% 5% 1% 5% 2% 5% 4% 4% 4% 3% 4% 2% 3% 3% 2% 1% -3% Jan Feb
Slide 15: RV Content per Unit
RV Content per Unit RV Market Patrick RV Content per Unit (Calculated on a TTM basis) $8,000 26% increase $2,639 $2,101 $1,930 $1,682 $1,410 $1,217 RV Product Categories TOWABLE MOTORIZED Travel Trailer Fifth Wheel Class A Class B & C ASP $22,035 ASP $50,768 ASP $160,940 ASP $97,663 • 88% of all who
Slide 16: Industry Trends: Marine Market
Industry Trends Marine Market Favorable Industry Trends Increased outdoor lifestyle and core recreational boater demand 36% (142 million) of U.S. adult population participated in recreational boating in 2017 12 million registered boats in the U.S. in 2017 25 years average age of a boat on the water
Slide 17: 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 18: Marine Content per Unit
Marine Content per Unit Marine Market Patrick Marine Content per Powerboat Retail Unit (Calculated on a TTM Basis) $7,500 178% increase $878 $316 $120 Marine Powerboat Product Categories Our products are primarily used in the traditional powerboat market which we view as the following four categorie
Slide 19: Industry and Market Review: Housing & Industrial
Industry and Market Review: Housing & Industrial
Slide 20: Growing Housing Demand
Source: U.S. NAHB, U.S. Census, Source: 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
Slide 21: Industry Trends: MH Market
Industry Trends MH Market Favorable Industry Trends Excellent alternative to the traditional “stick” built home 9 million households with 22 million people living in manufactured homes 80% of all new homes sold under $150,000 are MH $49 per sq. ft. average structure cost compared to $107 for a singl
Slide 22: 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 23: MH Content per Unit
MH Content per Unit MH Market Our focus on strategic acquisitions and organic growth has resulted in significant increases in our content per unit and sales outpacing our respective markets MH Content per Unit (Calculated on a TTM Basis) 21% increase $8,500 $2,520 $2,084 $1,790 $1,827 $1,585 $1,592
Slide 24: Industry Trends: Industrial Market
Industry Trends Industrial Market Favorable Industry Trends Housing starts are well below the prior peak and there continues to be pent-up demand, providing continued runway in the new housing market 60% of Patrick’s Industrial sales are linked to the residential housing market 9% increase in single
Slide 25: Industry Outlook: Industrial Market
Industry Outlook Industrial Market Diversification and Annual New Housing Starts (starts in thousands) Adjacent Markets 2,500 Leverage our manufacturing and 2,000 +5% distribution annual growth capabilities, 1,500 geographic footprint and product 1,000 expertise to 500 penetrate adjacent markets and
Slide 26: Strategy
Strategy
Slide 27: Capital Allocation Strategy
Capital Allocation Strategy Our capital allocation strategy is centered around the utilization of a balanced leverage position, strong cash flows and capital resources to grow and reinvest in the business model Capital Stock Debt Acquisitions Expansion Expenditures Repurchases Reduction . . Execute
Slide 28: Acquisition Execution
Acquisition Execution Demonstrated ability to source, acquire and integrate while increasingly executing on opportunities across diverse end-markets Acquisition Momentum Acquisition End-Market Mix ($ in millions) $258MM Avg. Revenues Acquired $59MM Avg. Revenues Acquired . Commitment to expanding pr
Slide 29: Geographic and Product Expansion
Geographic and Product Expansion Focus on expansion opportunities with $250MM market potential Targeted Product Lines: . Lamination . Solid Surface . Aluminum . Hardwood Products . FRP . Pressed Products . Fiberglass . Interior Doors . Paint . Plastics . Shower Doors . Bath & Closet Systems 1 PACIFI
Slide 30: Capital Expenditures
Capital Expenditures We will continue to invest in our infrastructure to drive efficiency and capacity, and flex our capital spend when necessary to align with our demand levels Annual Capital Spending ($ in millions) $25-$30 $22.5 $15.4 $8.7 $7.9 $8.0 $6.5 Maintenance capex $4.2 approximately $5MM
Slide 31: 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 $139MM
Slide 32: Performance
Performance
Slide 33: Outperforming End-Market Growth
Outperforming End-Market Growth ($ 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 34: 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 35: 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 $27 2010 2011 2012 2013 2014 2015 2016 2017 Gross
Slide 36: Sales & Earnings Growth
Sales & Earnings Growth ($ 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 37: Patrick Industries, Inc.
PATRICK INDUSTRIES, INC.
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