Patrick Industries, Inc. · NASDAQ:PATK

Patrick Industries — Investor Presentation (March 2018)

50 slides from Patrick Industries's investor presentation, Mar 12, 2018

1. Slide 1: Investor Presentation March 2018

   Investor Presentation March 2018

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: Company Overview

   Company Overview

4. Slide 4: Patrick Milestones

   Patrick Milestones 4 1959 Company founded 1968 Company taken public (NASDAQ) 2007 Acquired Adorn Holdings, Inc. – the largest acquisition in the Company’s history 2008 & 2009 Todd Cleveland named President (‘08) and CEO (‘09) 2017  Common stock offering  Credit facility expansion to $450MM  Compl

5. Slide 5: Patrick at a Glance

   Patrick at a Glance  Founded in 1959 and incorporated in Indiana in 1961  Key component manufacturer and supplier to the RV, Marine, Housing, and Industrial Markets  Headquartered in Elkhart, Indiana – the “RV Capital of the World”  Operates over 100 facilities in 20 states & China  Approximate

6. Slide 6: Market Platform and 2017 Sales Mix

   Marine 7% of Patrick’s 2017 Sales Industrial 11% of Patrick’s 2017 Sales MH 13% of Patrick’s 2017 Sales RV 69% of Patrick’s 2017 Sales 6 Market Platform Lifestyle & Leisure Housing & Industrial

7. Slide 7: Patrick Product Offering: RV Market

   Patrick Product Offering 7 Laminated and Fiberglass Products Hardwoods & Softwoods, Cabinetry, and Fabricated & Solid Surface Countertops Electrical System Components RV Painting and Fabricated Aluminum Products Distribution, Transportation and Design Services RV Market RV segment sales comprised 69

8. Slide 8: Patrick Product Offering: Marine Market

   Patrick Product Offering 8 Fiberglass Helm and Dash Assemblies Wire Harnesses Aluminum Fuel Tanks Metal Fabrication Design Services Marine Market Marine segment sales comprised 7% of total Patrick sales in 2017

9. Slide 9: Patrick Product Offering: MH Market

   Patrick Product Offering 9 Fiberglass products Laminated, Gypsum and Roofing Products Distribution & Design Services MH Market MH segment sales comprised 13% of total Patrick sales in 2017 Hardwoods & Softwoods, Cabinetry, and Fabricated & Solid Surface Countertops Electrical and Lighting

10. Slide 10: Patrick Product Offering: Industrial Market

    Patrick Product Offering 10 Industrial segment sales comprised 11% of total Patrick sales in 2017 Industrial Market Solid Surface and Fabricated Countertops Slotwall Distribution & Design Services Shower Doors and Fabricated Glass, Tubs and Showers FRP and Polymer Panels

11. Slide 11: Strategically aligned with OEM customers offering a nationwide network

    11 11 Strategically aligned with OEM customers offering a nationwide network Over 100 facilities in 20 states with approximately 7,000 employees Headquarters Existing Patrick Facility Patrick Facility Profile *There is one manufacturing facility located in China that was part of the November 2017 LM

12. Slide 12: Markets Served & Trends

    Markets Served & Trends

13. Slide 13: Economic Fundamentals

    Economic Fundamentals Solid trends in 2017 macro economic fundamentals signal positive outlook in our industries served going into 2018 13 Unemployment Rate Consumer Confidence 8% increase in 2017 4.1% ending rate in 2017  Strong consumer confidence  Relatively low interest rates  Lower, stable f

14. Slide 14: Population Demographic Trend

    36,000 38,000 40,000 42,000 44,000 46,000 48,000 50,000 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 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 20 25 20 26 20 27 20 28 20 29 20 3

15. Slide 15: Market Update: Lifestyle & Leisure

    Market Update: Lifestyle & Leisure

16. Slide 16: Demographic Trends – Lifestyle & Leisure

    Camping 28% Boating 36% All Other 36% Demographic Trends – Lifestyle & Leisure Outdoor Participation Outdoor Participation by Activity - 2016 # of participants in millions 49% of the US population participated in an outdoor activity in 2016 64% participated in Camping or Boating activities in 2016 S

17. Slide 17: Market Overview: RV Market

    Market Overview 17 RV Market Source: KOA North American Camping Report; RVIA Favorable Demographic Trends Growing Camping Activity RV Demand by Age Group Aged 34 and Younger 18% Aged 35 to 54 41% Aged 55 to 64 32% Aged 65 and Older 9%  37.1 million North American households camp once a year and 22%

18. Slide 18: RV Industry Outlook

    173 163 203 228 +21% 259 247 248 255 293 +24% 321 300 257 311 321 370 384 +22% 391 353 237 166 242 252 286 321 357 374 431 505 RV Wholesale Unit Shipments Consumer Confidence RV Annual Shipments Industry Outlook 18 Gulf War 9/11 Attacks Residential Housing Crisis It is our belief that trended shipme

19. Slide 19: Market Overview: Marine Market

    Market Overview 19 Source: National Marine Manufacturers Association Statistics Outdoor Recreational Lifestyle Trends Influencing the Market  Continued core recreational boater demand  Three most popular boating activities: fishing, swimming and entertaining  Active, outdoor lifestyle continuing

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: Market Update: Housing & Industrial

    Market Update: Housing & Industrial

22. Slide 22: Demographic Trends – Housing & Industrial

    Demographic Trends – Housing & Industrial Source: National Association of Realtors (Aspiring Home Buyers Profile & Economic and Housing Outlook) and Harvard Updated Household Projections Approximately 80% of non-homeowners desired to own a home in the future in 2017 198 0 198 1 198 2 198 3 198 4 198

23. Slide 23: Market Overview: MH Market

    Market Overview 23 Source: Manufactured Housing Institute (MHI) Statistics Affordable Form of Home Ownership Manufacturing  Average structure cost per sq. ft. (2016) $48.82 (MH) vs. $107.18 (single family home)  Average MH retail price (2016) $70,900 for 1,446 sq. ft. (home only)  Approximately 9

24. Slide 24: MH Industry Outlook

    193 168 131 131 147 118 96 82 50 50 52 55 60 64 71 81 93 124 141 MH Wholesale Unit Shipments MH Units MH % of Single Family Home Starts Industry Outlook 24 Source: 1990-2017: MHI; 2018F - 2020F Company Estimates, NAHB The MH industry continues to perform at historical lows reflecting the residual im

25. Slide 25: Market Overview: Industrial Market

    Market Overview 25 Residential Housing Commercial & Institutional Fixtures Patrick Sales Composition  Includes the 3 following classifications:  Big Box Retail  Retail & Commercial Fixtures  High Rise, Office, Hospitality, Schools & Universities  Housing starts increased 2% compared to 2016  S

26. Slide 26: Industrial Market Industry Outlook

    Industry Outlook 26 Sources: New Housing Starts - U.S. Census Bureau; Existing Home Sales – National Association of Realtors; NAHB; 2018F – 2020F Company estimate Industrial Market Annual New Housing Starts Diversification and Adjacent Markets Leverage our manufacturing and distribution capabilities

27. Slide 27: Capital Allocation Strategy

    Capital Allocation Strategy

28. Slide 28: Focused Capital Allocation

    Focused Capital Allocation Acquisitions Capital Expenditures Expansions Stock Repurchases Debt Reduction 28 Maintain efficient and flexible balance sheet through disciplined use of cash flows and leverage to drive growth and strong ROIC Our capital allocation strategy is centered around the utilizat

29. Slide 29: Acquisition Momentum

    $22 $26 $80 $42 $126 $233 $167 $309 2010 2011 2012 2013 2014 2015 2016 2017 Acquisition Momentum 29 ($ in millions) $59MM Avg. Revenues Acquired  Commitment to expanding product portfolio within our core markets has resulted in over 40 strategic acquisitions since 2010  Averaged ~$236MM in annuali

30. Slide 30: Geographic and Product Expansion

    Geographic and Product Expansion 1 2 3 4 5 PACIFIC NORTHWEST SOUTHERN CALIFORNIA  Lamination  Aluminum  FRP  Fiberglass  Paint  Shower Doors TEXAS SOUTHEAST NORTHEAST Focus on expansion opportunities with $250MM market potential 30 Financial Overview Targeted Product Lines: 1 2 3 4 5  Solid S

31. Slide 31: Annual Capital Spending

    $4.2 $0.3 $1.4 $2.4 $7.9 $8.7 $6.5 $8.0 $15.4 $22.5 $25.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F Capital Expenditures We will continue to invest in our infrastructure to drive efficiency and capacity and flex our capital spend when necessary to align with our demand levels ($ in mil

32. Slide 32: Leverage Capacity

    0.0 1.0 2.0 3.0 4.0 5.0 $30MM of Acquisitions $17MM of Acquisitions $72MM of Acquisitions $139MM of Acquisitions $10MM of Acquisitions & $94MM Equity Offering $140MM of Acquisitions $239MM of Acquisitions Leverage Capacity 32 We expect to continue to utilize our leverage and our cash flows in alignm

33. Slide 33: Performance

    Performance

34. Slide 34: Outperforming End-Market Growth

    Outperforming End-Market Growth 34 In recent years, Patrick’s sales growth has outpaced industry growth in all four of our primary markets RV Marine MH Industrial 6-year CAGR Patrick: 35% Industry: 12% 3-year CAGR Patrick: 143% Industry: 7% 6-year CAGR Patrick: 19% Industry: 10% 6-year CAGR Patrick:

35. Slide 35: Margin Expansion

    Margin Expansion 35 $44 $66 $91 $119 $152 $202 $279 $13 $27 $41 $51 $70 $91 $122 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% 16.6% 16.7% 16.7% 16.9% 17.1% 1.6% 2.2% 3.7% 4.4% 5.9% 6.2%6.2% 6.2% 6.3% 6.8%6.7

36. Slide 36: Sales & Earnings Growth

    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 growth driven by the following:  Leveraging of fixed costs  Tight management of controllable

37. Slide 37: Appendix

    Appendix

38. Slide 38: Acquisition Summary

    Acquisition Summary 38 ($ in millions) Acquisition Date of Acquisition Purchase Price Annualized Revenue (at Acquisition) Segment Industry Overview of Products Quality Hardwoods Sales 01/2010 $2.0 $2.0 MFG RV Cabinet Doors Blazon International Group 08/2010 $3.8 $20.0 DIST RV & MH Wiring, electrical

39. Slide 39: Acquisition Summary

    Acquisition Summary 39 ($ in millions) Acquisition Date of Acquisition Purchase Price Annualized Revenue (at Acquisition) Segment Industry Overview of Products Parkland Plastics 02/2016 $25.2 $30.0 MFG RV & Industrial Polymer-based products including wall panels, lay-in ceiling panels, coated & roll

40. Slide 40: Steady Increase In Content Per Unit

    Steady Increase In 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 2017 compared to 2016  Strateg

41. Slide 41: Product Overview: RV Market

    Product Overview 41 RV Market Source: RVIA Industry Shipments; RVIA 2016 Industry Profile Travel trailer stats include camping trailer and park models Class B & C Travel Trailer Class A Fifth Wheel  69% of 2017 wholesale unit shipments  Wholesale shipment increase of 18% in 2017  8 – 40 feet  AS

42. Slide 42: Patrick Product Lines – RV Interior

    Patrick Product Lines – RV Interior 42 Electronics Speakers Microwaves Furniture Mattresses Laminate & Ceramic Flooring Closet Hardware Vanity/Wall Mirrors Lighting Closet & Passage Doors Countertops Drawer Fronts & Sides Laminated Panels & Printed Vinyl Backsplashes Hardwood Accessories Window Trim

43. Slide 43: Patrick Product Lines – RV Exterior

    Patrick Product Lines – RV Exterior 43 Exterior Speakers Paint & Paint Mask LED Lighting Aluminum & FRP Side Walls Laminated Side Walls Motion Sensing Lights RV Power Cords & Inlets RV Grills & Accessories Front and Rear Caps Bow Trusses

44. Slide 44: Patrick RV Products Growth Potential

    Patrick RV Products Growth Potential 44 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

45. Slide 45: Product Overview: Marine Market

    Product Overview 45 Marine Market Aluminum Pontoon Fiberglass Ski & Wake  32% of traditional powerboats sold in 2016  Outboard engine  66% of Aluminum outboard boats less than 21’  ASP = $19,668  1% increase of retail shipments in 2017  28% of traditional powerboats sold in 2016  Outboard eng

46. Slide 46: Marine Products

    Marine Products Aluminum Fuel & Holding Tanks Boat Hull Design & Tooling 46 Aluminum Fuel & Holding Tanks Electronics Dash Assemblies Wire Harnesses Wire Screens Helms Dash Assemblies Electronics Wire Harnesses Extruded metal pontoon fence panels Seat Bases Hinges & Brackets Arm Rests

47. Slide 47: Patrick Product Lines – MH Interior & Exterior

    Patrick Product Lines – MH 47 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 & Enclosures Cabinet Doors & Components Microwaves Co

48. Slide 48: 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 48

49. Slide 49: Portfolio of Expertise with Key Capabilities

    Portfolio of Expertise with Key Capabilities 49 RV Marine MH Industrial Plastics / Thermoforming Furniture & Sourcing/Specialty Bath, Shower & Closet Systems Solid Surface / Granite / Quartz Countertops & Fabrication Metal Fabrication / Fuel Tanks Fiberglass Component Products / Tooling / Hulls / En

50. Slide 50: Patrick Industries

    PATRICK INDUSTR

Patrick Industries — Investor Presentation (March 2018) on 6ix