Patrick Industries, Inc. · NASDAQ:PATK

Patrick Industries — Investor Presentation (September 2017)

43 slides from Patrick Industries's investor presentation, Sep 14, 2017

  1. Slide 1: Investor Presentation September 2017

    Investor Presentation September 2017

  2. 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

  3. Slide 3: Patrick History

    2 0 1 5 Company taken public (NASDAQ) Date of Incorporation Patrick History 3 1 9 5 9 Company founded 1 9 6 1 1 9 6 8 2 0 0 7 Acquired Adorn Holdings, Inc. – the largest acquisition in the Company‟s history 2 0 0 8 Todd Cleveland named President („08) and CEO („09) Completed 3-for-2 common stock spl

  4. Slide 4: Patrick at a Glance

     Founded in 1959 and incorporated in Indiana in 1961  Headquartered in Elkhart, Indiana – the “RV Capital of the World”  Leading national manufacturer and supplier of building and component products to the RV, MH, marine and select industrial markets  Operates over 85 facilities in 19 states  A

  5. Slide 5: Market Platform

    Marine 5% of Patrick‟s Jun-YTD Sales Industrial 12% of Patrick‟s Jun-YTD Sales MH 13% of Patrick‟s Jun-YTD Sales RV 70% of Patrick‟s Jun-YTD Sales 5 Market Platform Lifestyle & Leisure Housing & Industrial

  6. Slide 6: Strong Brands

    6 Differentiated, customer-centric brand strategy and business model  Portfolio of brands enable OEM customers to differentiate their products to consumers  Brands retain significant autonomy to maintain entrepreneurial spirit and brand individuality enabling continuation of legacy value propositi

  7. Slide 7: Portfolio of Expertise

    Portfolio of Expertise Plastics/Thermoforming Furniture & Sourcing Solid Surface/Granite Countertops & Fabrication Metal Fabrication/Fuel Tanks Fiberglass Products/Tooling/ Engineering & Design Services Warehousing/Distribution/ Comprehensive Design Center Electronics/Appliances Full/Partial Body Pa

  8. Slide 8: Patrick Facility Profile

    8 8 Strategically aligned with OEM customers offering a nationwide network Over 85 facilities in 19 states with approximately 6,500 employees Headquarters Existing Patrick Facility Patrick Facility Profile

  9. Slide 9: RV Market: Demographic Trends

    Demographic Trends  Overall camping experiences and RV awareness are driving growth among younger and more diverse participants  Younger campers looking for affordable recreation experience  38% of all campers are millennials (ages 18-35)  34% of new RVs sold in 2016 were to first time buyers 

  10. Slide 10: RV Market Stats: Towable vs. Motorized

    Market Stats  87% of industry 2016 unit sales  61% of estimated 2016 retail dollar sales, or $10.7 billion  Retail cost $5,000 to $160,000+ per unit  Average $29,000  13% of industry 2016 unit sales  39% of estimated 2016 retail dollar sales, or $7.0 billion  Retail cost $43,000 to $500,000+

  11. Slide 11: RV Towable Shipments

    RV Towable Shipments 11 Source: RVIA 2016 Industry Profile RV Market Travel Trailers drive greater share of market, fueled by younger, first- time RV buyers RV wholesale towable shipments (in thousands) 68% 69% 70% 71% 73% 75% 75% 26% 25% 25% 25% 23% 21% 21% 6% 6% 5% 4% 4% 4% 4% Travel Trailers Trav

  12. Slide 12: RV Motorized Shipments

    RV Motorized Shipments 12 Source: RVIA 2016 Industry Profile RV wholesale motorized shipments (in thousands) RV Market Class C motorized units drive greater share of market, fueled by younger, first-time RV buyers 51% 50% 50% 46% 42% 42% 36% 41% 44% 43% 47% 51% 51% 55% 8% 6% 7% 7% 7% 7% 9% Conventio

  13. Slide 13: RV Shipment Trends

    RV Shipment Trends Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Jul-17 Wholesale Retail  Retail unit shipment growth has consistently been in line with or exceeded wholesale unit shipment growth  July adjusted retail is up 14% YTD, aligned with wholesale growth  Dealer inventory ch

  14. Slide 14: RV Retail Shipments

    4.2% 4.3% 4.8% 3.9% 6.1% 7.9% 0.9% 4.7% 19.8% 15.5% 13.6% 11.6% 14.5% 17.3% 9.9% 14.0% Jan Feb Mar Apr May Jun Jul Jul-YTD 2017 Retail Unit Growth Compared to 2016 Initially Reported Subsequently Reported RV Retail Shipments  Retail shipments are reported monthly and updated in the subsequent month

  15. Slide 15: RV Industry Outlook

    173 163 203 228 +21% 259 247 248 255 293 +24% 321 300 257 311 321 370 384 +22% 391 353 237 166 242 252 286 321 357 374 431 480 RV Wholesale Unit Shipments Consumer Confidence RV Annual Shipments Industry Outlook 15 Gulf War 9/11 Attacks Residential Housing Crisis It is our belief that trended shipme

  16. Slide 16: MH Market: Affordable Form of Home Ownership

    Affordable Form of Home Ownership  Average structure cost per sq. ft. (2015) $47.55 (MH) vs. $100.65 (single family home)  Average MH retail price (2015) $68,000 for 1,430 sq. ft. (home only) Overview MH Market Statistics  Approximately 9 million households with 22 million people living in manufa

  17. Slide 17: MH Industry Outlook

    193 168 131 131 147 118 96 82 50 50 52 55 60 64 71 81 93 124 142 MH Wholesale Unit Shipments MH Units MH % of Single Family Home Starts Industry Outlook 17 Source: 1990-2016: MHI; 2017F - 2020F Company Estimates, NAHB The MH industry continues to perform at historical lows reflecting the residual im

  18. Slide 18: Marine Market Overview

    Statistics  36% of the U.S. adult population participated in recreational boating in 2016  Estimated 141.6 million people went boating in 2016  11.9 million registered powerboats in the U.S. Overview Marine Market Outdoor Recreational Lifestyle  Continued core recreational boater demand  Three

  19. Slide 19: Retail Powerboat Trends

    Retail Powerboat Trends  The traditional powerboat market continues to recover with 2016 estimated to be the 6th consecutive year of steady annual growth  Average selling price (“ASP”) has steadily increased as OEMs continue to add content to boats Marine Market Source: National Marine Marketing A

  20. Slide 20: U.S. Marine Outlook

    - 100,000 200,000 300,000 400,000 500,000 600,000 19 65 19 66 19 67 19 68 19 69 19 70 19 71 19 72 19 73 19 74 19 75 19 76 19 77 19 78 19 79 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 0

  21. Slide 21: Industrial Market: Non-Residential End-Markets

    Big Box Retail  Kitchen cabinets  Office furniture  Electronics distribution  Polymer-based wall panels, adhesives and accessories Non-Residential End-Markets Industrial Market Retail and Commercial Fixtures  Store fixtures  Slotwall  Casework and office furnishings  Solid surface countertop

  22. Slide 22: Industrial Market: Residential End-Markets

    554 587 609 781 925 1,003 1,112 1,174 4,340 4,190 4,260 4,660 5,090 4,940 5,250 5,450 3,900 4,100 4,300 4,500 4,700 4,900 5,100 5,300 5,500 400 500 600 700 800 900 1,000 1,100 1,200 1,300 Existing Hom e Sales (000's)Ne w Hou sin g Start s (0 00' s) Growth in Housing Market Driving Demand New Housing

  23. Slide 23: Focused Capital Allocation

    Use strong cash flow to reduce debt and reload growth capacity 23 Maintain efficient and flexible balance sheet through measured use of leverage to drive growth and strong ROE with prepayable debt Invest in internal growth and cost savings opportunities including geographic locations, product extens

  24. Slide 24: Cash Flow Generation and Growth

    Cash Flow Generation and Growth ($ in millions) 24 $22 $46 $66 $97 2013 2014 2015 2016 Cash Flows from Operating Activities Cash Flows from Operating Activities $51 $65 $87 $96 2013 2014 2015 2016 Working Capital Working Capital $14 $39 $58 $82 2013 2014 2015 2016 Free Cash Flow Free Cash Flow Stron

  25. Slide 25: Acquisition Strategy

    Acquisition Strategy Expand into adjacent markets to further leverage core manufacturing and distribution capabilities, gain new growth platforms and diversify end-market exposure Introduce new, innovative product lines complementary to core competencies Cross sell extensive product catalog to custo

  26. Slide 26: Geographic and Product Expansion

    Geographic and Product Expansion 1 2 3 4 5 PACIFIC NORTHWEST 1 SOUTHERN CALIFORNIA • Lamination • Aluminum • FRP • Fiberglass • Paint • Solid Surface • Hardwood Products • Pressed Products • Industrial • Interior Doors TEXAS SOUTHEAST NORTHEAST • Softwoods • Paint • Solid Surface • Hardwood Products

  27. Slide 27: Capital Expenditures

    $2.5 $4.2 $0.3 $1.4 $2.4 $7.9 $8.7 $6.5 $8.0 $15.4 $16.0 $4.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F Capital Expenditures We will continue to invest in our infrastructure to drive efficiency and capacity and flex our capital spend when necessary to align with our demand levels ($ in

  28. Slide 28: Leverage Capacity

    Leverage Capacity 28 We expect to continue to utilize our leverage and cash flow in alignment with our capital allocation strategy. Our strong free cash flow, combined with our recent equity offering and increased credit facility, provide us with ample dry powder to continue our strategic growth ini

  29. Slide 29: Appendix

    Appendix

  30. Slide 30: Sales & Earnings Growth

    ​ $437 +36% $595 +24% $736 +25% $920 +33% $1,222 2012 2013 2014 2015 2016 Sales Growth Sales Sales & Earnings Growth  Sales continue to grow and outpace their respective markets, driven by acquisitions, new products and extension growth and market share gains  Net Income and EPS continue steady gr

  31. Slide 31: Content per Unit

    Content per Unit  Our focus on strategic acquisitions and organic growth have resulted in significant increases in our content per unit and sales outpacing our respective markets  RV and MH content per unit increase of 9% and 16%, respectively in Q2 2017 compared to 2016  Strategic Growth Initiat

  32. Slide 32: Acquisition Summary by Year

    Acquisition Summary by Year 32 2010 Acquisition Highlights 2014 Acquisition Highlights • 2 companies • 7 companies • $6MM aggregate purchase price • $72MM aggregate purchase price • $22MM annualized sales • $126MM annualized sales • Primarily RV market-based • Primarily RV market-based 2011 Acquisit

  33. Slide 33: Acquisition Summary 2010-2012

    Acquisition Summary 2010 2011 2012 Quality Hardwoods Sales Blazon International Group The Praxis Group A.I.A. Countertops, LLC Infinity Graphics Décor Mfg., LLC Gustafson Lighting Creative Wood Designs, Inc. Middlebury Hardwood Products, Inc. Date of Acquisition: 01/2010 08/2010 06/2011 09/2011 12/2

  34. Slide 34: Acquisition Summary 2013-2015

    Acquisition Summary 2013 2014 2015 Frontline Mfg., Inc. Premier Concepts, Inc. West Side Furniture Precision Painting Group Foremost Fabricators, LLC PolyDyn3, LLC Charleston Corporation Better Way Partners, LLC Structural Composites of Indiana, Inc. North American Forest Products & North American M

  35. Slide 35: Acquisition Summary 2016-2017

    Acquisition Summary 35 ($ in millions) 2016 2017 Parkland Plastics The Progressive Group Cana Cabinetry Mishawaka Sheet Metal L.S. Manufacturing, Inc. BH Electronics, Inc. Sigma Wire & KRA Intl. Medallion Plastics, Inc. Marine Concepts Marine Electrical Products Florida Marine Tanks Wire Design Baym

  36. Slide 36: RV Product Overview

    Product Overview Class A Class B Class C ASP $175,304 $112,732 $90,482 2016 Wholesale Units 22.7K 4.1K 28.0K 2016 Market Size $4.0B $0.5B $2.5B Length 21 – 40 feet 16 – 22 feet 21 – 35 feet General Description  Built on a heavy truck chassis  Diesel and Gas models feature different performance cap

  37. Slide 37: Patrick Product Lines – RV Interior

    Patrick Product Lines – RV Interior 37 Additional Supplied Products:  Exit Lighting  Ceiling Fans  Power Cords & Inlets  RV Tank Heater Pads  Fire Extinguishers  Electric Fireplaces  Wiring, Electrical & Plumbing Products  Inverters  Tire Pressure Monitors  Electrical Switches, Receptacles

  38. Slide 38: Patrick Product Lines – RV Exterior

    Patrick Product Lines – RV Exterior 38 Exterior Speakers Paint & Paint Mask LED Lighting Aluminum & FRP Side Walls Laminated Side Walls Additional Product Lines:  Softwoods  Full Body Paint  Aluminum Gauges  Steel Gauges  Mill Finish & Pre- Painted Aluminum and Steel  Slit & Embossed Steel  F

  39. Slide 39: Patrick RV Products Growth Potential

    Patrick RV Products Growth Potential 39 Heating, Ventilating, Air Conditioning Window Coverings Rolled Flooring Bedding Exterior Mirrors Carpeting Windshield Wipers Holding Tanks Captains Chairs Appliances Toilets/Plumbing Water Heaters Gauges Dashboards & Components Hardware Tires & Rims Roofing In

  40. Slide 40: Patrick Product Lines – MH Interior & Exterior

    Patrick Product Lines – MH 40 Interior & Exterior Decorative Lighting Fixtures Interior Passage Doors Kitchen & Bath Faucets & Sinks Gypsum (Drywall & Drywall Finishing Products) Laminate & Ceramic Flooring Fiberglass Bath Fixtures & Shower Doors Cabinet Doors & Components Microwaves Countertops Ele

  41. Slide 41: Patrick MH Products Growth Potential

    Patrick MH Products Growth Potential Composite Decking Carpet & Carpet Pad Hardware Alternative Roofing Insulation Lumber Windows Additional Supplied Products: • Water Heaters • Appliances • Toilets/Plumbing • HVAC Solar Panels Brackets/Braces & Hardware 41

  42. Slide 42: Marine Products

    Marine Products Aluminum Fuel & Holding Tanks Boat Hull Design & Tooling 42 Aluminum Fuel & Holding Tanks Electronics Dash Assemblies Wire Harnesses Wire Screens Helms Dash Assemblies Electronics Marine Growth Potential:  Wind Shields (Glass)  Plastic fuel & holding tanks  Fuel system related com

  43. Slide 43: Patrick Industries

    PATRICK INDUSTR

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