Slide 1: Patrick Industries, Inc. Investor Presentation December 2016
Patrick Industries, Inc. Investor Presentation December 2016 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. Th
Slide 3: Company Overview
Company Overview _—
Slide 4: Patrick History
4 Patrick History 1 9 5 9 1 9 6 1 1 9 6 8 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 Company issues shares in private placement and conducts Rights Offering to pay off subordinated debt Company drives its Organizational Strategic Agenda (OSA) and Customer First P
Slide 5: Patrick at a Glance
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 and Industrial markets Operates over 60 facilities in 16 state
Slide 6: Strong Brands
Strong Brands Ue PATRICK INDUSTRIES, ING Ahab po ADORN ay BETTERWAY. LS |Monufacturing 3 x EC (5 ®PolyDyn® 7 ) vito ousicg PPOYPY™’ SiipecoR) Gravure ink © | al
Slide 7: Product Portfolio Industries Overview
P ro d u ct Port fo li o Industries Overview 7 RV • 75% of 9M-2016 sales • Shipment growth 14% 9M-2016 Wall and ceiling panels Pressed and hardwood doors Countertops Fabricated aluminum & FRP products Wrapped mouldings Cabinet doors Electrical, wiring, plumbing Furniture and mattresses Fiberglass pr
Slide 8: Patrick Facility Profile
Patrick Facility Profile ~ PATRICK
Slide 9: Sales & Earnings Growth
+13% $24 +28% $31 +38% $42 $30 35% $41 +11% $1.49 +29% $1.91 +42% $2.72 $1.95 +37% $2.68 2013 2014 2015 9M-15 9M-16 Earnings Growth Net Income Diluted EPS +36% $595 +24% $736 +25% $920 $672 +34% $898 2013 2014 2015 9M-15 9M-16 Sales Growth Sales Sales & Earnings Growth 9 ($ in millions except
Slide 10: Margin Expansion
$44 $66 $91 $119 $152 $13 $27 $41 $51 $70 10.9% 11.8% 13.5% 14.4% 15.5% 15.7% 15.2% 15.0% 15.0% 15.2% 15.1% 15.3% 15.4% 15.7% 16.0% 16.1% 16.1% 16.2% 16.3% 16.5% 16.6% 16.8% 16.7% 1.6% 2.2% 3.7% 4.4% 5.9% 6.2% 6.2% 6.2% 6.3% 6.8% 6.7% 6.8% 6.9% 6.9% 7.0% 7.0% 7.0% 7.2% 7.3% 7.6% 7.7% 7.8% 7.9% $0 $2
Slide 11: RV Market
RV Market
Slide 12: RV Market Sales Growth
227 258 283 313 327 249 283 25 28 38 44 47 36 41 252 +13% 286 +12% 321 +11% 357 +5% 374 285 +14% 324 $187 +60% $300 +43% $430 +27% $548 +26% $691 $506 +33% $674 2011 2012 2013 2014 2015 9M-15 9M-16 Towable Shipments Motorized Shipments Patrick RV Sales RV Market Sales Growth 12 Patrick RV sal
Slide 13: RV Market Drivers of Market Growth
RV Market Drivers of Market Growth 13 Long- Term Market Growth Industry Strength Economy Demographics Lifestyle • Retail shipments outpaced wholesale shipments in 2015 allowing for healthy dealer inventories • 2015 wrapped up 6th consecutive year of wholesale unit shipment growth • 2016FY projected
Slide 14: Industry Trends
Industry Trends 14 9M-2016 Wholesale Shipments Travel Trailer 65% Fifth Wheel 19% Camping Trailer 2% Park Model 1% Class A 5% Class B & C 8% Towables 87% Motorized 13% RV Market Wholesale shipment growth is up 14% through 9M-16 Led by travel trailers Double digit growth every quarter this year
Slide 15: Retail vs. Wholesale RV Market
Retail vs. Wholesale 15 RV Market Retail continues to be strong in 2016, up 9% for 9M-16, with wholesale units up 14% compared to prior year Growth of retail outpaced that of wholesale in 2015 Towable retail growth of 14% compared to wholesale shipment growth of 5% Motorized retail growth of 1
Slide 16: Content per Unit RV Market
Content per Unit 16 RV Market $697 $1,002 $1,271 $1,488 $1,739 $2,085 $5,600 RV unit content increased 20% in Q3-16 vs. prior year Driven by new products, extension growth, acquisitions, and market share gain 100% market share in existing products would yield an estimated $6,300 RV content per
Slide 17: Industry Outlook
173 163 203 228 +21% 259 247 248 255 293 +24% 321 300 257 311 321 370 384 +22% 391 353 237 166 242 252 286 321 357 374 420 RV Wholesale Unit Shipments Consumer Confidence RV Annual Shipments 476 Industry Outlook 17 Gulf War 9/11 Attacks Residential Housing Crisis It is our belief that trended shipme
Slide 18: MH Market
MH Market
Slide 19: MH Market Sales Growth
Sales Growth 19 MH Market 50 +1% 50 +3% 52 +6% 55 +10% 60 +7% 64 +10% 71 52 +14% 60 $79 +0% $79 -6% $74 +15% $85 +12% $95 +14% $109 +18% $129 $92 +25% $115 2009 2010 2011 2012 2013 2014 2015 9M-15 9M-16* Wholesale Units Patrick MH Sales Patrick MH sales growth has outpaced industry growth fo
Slide 20: Market Conditions & Consumer Trends
Market Conditions & Consumer Trends 20 Approximately 9 million households with 22 million people living in manufactured homes (9% of nation’s single family housing stock) Affordable form of home ownership: Average structure cost per sq. ft. (2015): $47.55 (MH) vs. $100.65 (single family home)
Slide 21: Market Indicators
Market Indicators 21 Long- Term Market Growth Quality credit standards Number of aging “Baby Boomers” Tax incentives Alternative housing availability Consumer Demand Financing/ credit availability Dealer and manufacturer inventory levels Affordability and quality Consumer confidence Drivers of Consu
Slide 22: Content per Unit MH Market
Content per Unit 22 MH Market $1,500 $1,498 $1,599 $1,614 $1,820 $1,911 $6,200 MH unit content increased 5% in Q3-16 vs. prior year Driven by new products, extension growth, acquisitions, and market share gain 100% market share in existing products would yield an estimated $6,900 MH content pe
Slide 23: MH Wholesale Unit Shipments Industry Outlook
193 168 131 131 147 118 96 82 50 50 52 55 60 64 71 80 MH Wholesale Unit Shipments Industry Outlook 23 Source: 1990-2015: Manufactured Housing Institute (MHI); 2016F Company Estimate The MH industry continues to perform at historical lows reflecting the residual impacts from the residential housing m
Slide 24: Industrial Market
Industrial Market _—
Slide 25: Industrial Market Sales Growth
Sales Growth 25 Industrial Market 554 +6% 587 +4% 609 +28% 781 +18% 925 +8% 1,003 +11% 1,112 853 +4% 884 $40 -4% $39 +19% $46 +13% $52 +33% $70 +13% $79 +28% $101 $75 +46% $109 2009 2010 2011 2012 2013 2014 2015 9M-15 9M-16 Residential Housing Starts Patrick Industrial Sales Patrick industri
Slide 26: Industry Conditions
Industry Conditions 26 Industrial Market Residential Housing 50% Commercial & Institutional Fixtures 50% Q3-2016 Sales Composition Approximately 50% of the Company’s industrial revenue base is tied directly to the residential housing market (new construction and remodel) Our sales to the industr
Slide 27: Industry Outlook
Industry Outlook 27 The residential housing market appears to have begun its recovery NAHB is forecasting annual unit growth of: 3% for 2016 10% for 2017 9% for 2018 Source: 1990-2015: U.S. Census Bureau; 2016F-2018F: NAHB (as of October 28, 2016) (housing starts in thousands) Industrial M
Slide 28: Strategy Execution
Strategy Execution —_———
Slide 29: Capital Allocation Strategy
Debt Reduction and Leverage Position Capital Allocation Strategy 29 Acquisitions Geographic and Product Expansion Stock Buyback Program Investments in Infrastructure and Capital Expenditures Our capital allocation strategy is centered around the utilization of our leverage and capital resources to g
Slide 30: Capital Allocation
Debt increased $239 million from 2010 to Q3 2016 with $483 million invested in capital allocation strategy over that time period Leverage position relative to EBITDA remains just under 2x Capital Allocation 30 ($ in millions) $42 $281 $391 $45 $47 ($244) 2010 Beginning Debt Acquisitions Capital
Slide 31: Acquisition Strategy
Acquisition Strategy Target Organizations Solid management teams Strong customer & supplier relationships & operational talent High quality product lines Strong growth potential Strategic value proposition Diversification Allow creative entrepreneurial spirit to continue to thrive Provide capital, a
Slide 32: Acquisition Highlights by Year
2010 Acquisition Highlights 2014 Acquisition Highlights • 2 companies • 7 companies • $6MM aggregate purchase price • $72MM aggregate purchase price • $22MM annualized sales • $126MM annualized sales • Primarily RV market-based • Primarily RV market-based 2011 Acquisition Highlights 2015 Acquisition
Slide 33: Geographic & Product Expansion
Northeast • Softw oods • Fiberglass • Solid Surface • Hardw ood Products • Slotw all Products Southeast • Lamination • Fiberglass • Solid Surface Texas • Softw oods • Hardw ood Products • Industrial Southern California • Softw oods • Paint • Solid Surface • Hardw ood Products • Pressed Products Paci
Slide 34: Capital Expenditures
Capital Expenditures 34 We will continue to invest in our infrastructure to drive enterprise wide efficiency and flex our capital spend when necessary to align with our demand levels ($ in millions) $0.3 $1.4 $2.4 $7.9 $8.7 $6.5 $8.0 $15.0 2009 2010 2011 2012 2013 2014 2015 2016F 2016 Capital Spendi
Slide 35: Stock Buyback
Stock Buyback 35 388 223 - - 142 117 258 196 - - 423 71 40 - $63.09* $9.18 $9.95 $9.95 $9.95 $9.95 $12.97 $14.95 $17.73 $19.38 $19.38 $19.38 $24.41 $25.04 $25.47 $25.47 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15
Slide 36: Stock Performance
$28.93 $43.98 $19.29 $29.32 $43.50 $71.35 12/31/13 12/31/14 12/31/15 11/30/16 Pre-Stock Split Close Price Post-Stock Split Close Price Stock Performance 36 As of November 30, 2016, our split-adjusted closing stock price was $71.35, approximately 162% of our pre-split closing stock price of $43.98 on
Slide 37: PATK Highlights
37 PATK Highlights Added to the SmallCap 600 Index •Effective close of trading August 18th 45 Year Anniversary •Nasdaq Stock Exchange Listing - July 29, 1971 Ranked #41 - Fortune 100’s Fastest Growing Companies •Fortune Magazine 2016 2016 Indiana Public Company of the Year Award Winner •Award presen
Slide 38: Why Patrick Industries
Why Patrick Industries 38 • Approximately $17 billion addressable expanding RV & MH markets • Emerging industrial and housing market Markets • Continuously expanding product and company portfolio through organic growth and growth through acquisitions • Execution of strategic plan and balanced capita
Slide 39: Appendix
Appendix
Slide 40: Balance Sheet Strength
Balance Sheet Strength 40 We expect 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 o
Slide 41: Shareholder Value
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Patrick Stock Price and Volume Volume Price Close Shareholder Value 41 Patrick had approximately 15.3 million
Slide 42: Acquisition Summary
Date Completed Business Net Purchase Price Annualized Sales* Segment Industry Products 01/2010 Quality Hardwoods Sales $2.0 MM $2 MM Manufacturing RV Cabinet Doors 08/2010 Blazon International Group $3.8 MM $20 MM Distribution RV & MH Wiring, electrical, plumbing, and other building products 06/2011
Slide 43: Acquisition Summary
Date Completed Business Net Purchase Price Annualized Sales* Segment Industry Products 09/2013 Frontline Mfg., Inc. $5.2 MM $15 MM Manufacturing RV, MH & Industrial Fiberglass bath fixtures including tubs and showers 09/2013 Premier Concepts, Inc. $2.6 MM $10 MM Manufacturing RV, MH & Industrial Sol
Slide 44: Acquisition Summary
Acquisition Summary 44 *Projected Annualized Sales as of the acquisition date Date Completed Business Net Purchase Price Annualized Sales* Segment Industry Products 02/2015 Better Way Partners, LLC $40.5 MM $50 MM Manufacturing RV Fiberglass components 05/2015 Structural Composites of Indiana, Inc.
Slide 45: Patrick Product Lines – RV Interior
Patrick Product Lines – RV Interior 45 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
Slide 46: Patrick Product Lines – RV Exterior
Patrick Product Lines – RV Exterior 46 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
Slide 47: Patrick RV Products Growth Potential
Patrick RV Products Growth Potential 47 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
Slide 48: Patrick Product Lines – MH Interior & Exterior
Patrick Product Lines – MH 48 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
Slide 49: Patrick MH Products Growth Potential
Patrick MH Products Growth Potential 49 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
Slide 50: Patrick
PATRICK _ ,