Patrick Industries, Inc. · NASDAQ:PATK
Patrick Industries — Investor Presentation (January 2017)
44 slides from Patrick Industries's investor presentation, Jan 11, 2017
Slide 1: Patrick Industries, Inc. Investor Presentation January 2017
Patrick Industries, Inc. Investor Presentation January 2017 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 Completes Refinancing $80MM Leverage Based Credit Facility led by Wells Fargo
Slide 5: Patrick at a Glance
Patrick at a Glance Founded in 1959 and incorporated in Indiana in 1961 Headquartered in Elkhart, Indiana – the “RV Capital of the World” Leading national manufacturer and supplier of building and component products to the RV, MH and Industrial markets Operates over 70 facilities in 16 state
Slide 6: Strong Brands
Strong Brands (PATRICK LS Manufacturing Parkland Plastics Ge PATRICK
Slide 7: Product Portfolio and Industries Overview
P ro d u ct Port fo li o Industries Overview 7 RV • 75% of 9M-2016 sales • Shipment growth 14% 9M-2016 Wall and ceiling panels Pressed and hardwood doors Countertops Fabricated aluminum & FRP products Wrapped mouldings Cabinet doors Electrical, wiring, plumbing Furniture and mattresses Fiberglass pr
Slide 8: Patrick Facility Profile
Patrick Facility Profile _ PATRICK
Slide 9: Design Center & Product Development
Design Center & Product Development 9 At Patrick Industries we are constantly striving to partner with our customers to bring new and innovative products and design solutions to market 45,000 sq. ft. Design/Innovation Center located in Elkhart, IN Opened in March 2016 Includes 25,000 sq. ft. s
Slide 10: TTM Revenue, Net Income & EPS
TTM Revenue, Net Income & EPS 10 ($ in millions, except per share amounts) $4 37 $4 77 $5 21 $5 54 $5 95 $6 23 $6 51 $6 93 $7 36 $7 89 $8 35 $8 61 $9 20 $9 76 $1 ,05 7 $1 ,14 7 TTM Revenue Revenue$2 1 $2 2 $2 3 $2 2 $2 4 $2 5 $2 7 $2 8 $3 1 $3 3 $3 6 $3 7 $4 2 $4 5 $5 0 $5 3 $1.33 $1.39 $1.45 $1.39
Slide 11: Balance Sheet – Key Metrics
Balance Sheet – Key Metrics 11 $21 $22 $46 $66 $25 $50 2012 2013 2014 2015 Q3-15 Q3-16 Operating Cash Flow ($ in millions) Operating Cash Flow $13 $14 $39 $58 $21 $39 2012 2013 2014 2015 Q3-15 Q3-16 Free Cash Flow ($ in millions) Free Cash Flow $44 $55 $70 $87 $113 $116 2012 2013 2014 2015 Q3-15 Q3-
Slide 12: RV Market
RV Market
Slide 13: RV Market Drivers of Market Growth
RV Market Drivers of Market Growth 13 Long- Term Market Growth Industry Strength Economy Demographics Lifestyle • 2016 will be the 7th consecutive year of wholesale unit shipment growth • Retail demand is strong • New innovative designs and products • Attractive product mix and price point • Consume
Slide 14: RV Industry Demographics
Millennials are 2x as likely to say that outdoor recreation activities are important • Technology is allowing campers to stay connected, providing greater flexibility and promoting longer stays Camping with children is increasing at a rapid pace The % of campers with children in their homes: • 46% i
Slide 15: Industry Trends – RV Market
Industry Trends 15 Towables 87% Motorized 13% RV Market Wholesale shipment growth is up 15% through Nov-16 Led by travel trailers and Class B & C Double digit growth every quarter this year Shipment composition remains steady from prior year Towables is 87% of the market Motorized is 13%
Slide 16: RV Industry Outlook
173 163 203 228 +21% 259 247 248 255 293 +24% 321 300 257 311 321 370 384 +22% 391 353 237 166 242 252 286 321 357 374 420 RV Wholesale Unit Shipments Consumer Confidence RV Annual Shipments 480 Industry Outlook 16 Gulf War 9/11 Attacks Residential Housing Crisis It is our belief that trended shipme
Slide 17: MH Market
MH Market
Slide 18: MH Industry Outlook
193 168 131 131 147 118 96 82 50 50 52 55 60 64 71 80 MH Wholesale Unit Shipments Industry Outlook 18 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 19: Market Conditions & Consumer Trends
Market Conditions & Consumer Trends 19 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. $100.65 (single family home)
Slide 20: Industrial Market
Industrial Market _—
Slide 21: Industry Conditions – Industrial Market
Industry Conditions 21 Industrial Market Residential Housing 50% Commercial & Institutional Fixtures 50% Q3-2016 Sales Composition Approximately 50% of the Company’s industrial revenue base is tied directly to the residential housing market (new construction and remodel) Our sales to the industr
Slide 22: Strategy Execution
Strategy Execution —_———
Slide 23: Capital Allocation Strategy
Debt Reduction and Leverage Position Capital Allocation Strategy 23 Acquisitions Geographic and Product Expansion Stock Buyback Program Investments in Infrastructure and Capital Expenditures Our capital allocation strategy is centered around the utilization of our leverage and capital resources to g
Slide 24: Acquisition Strategy
Acquisition Strategy Target Organizations Solid management teams Strong customer & supplier relationships & operational talent High quality product lines Strong growth potential Strategic value proposition Diversification Allow creative entrepreneurial spirit to continue to thrive Provide capital, a
Slide 25: Geographic & Product Expansion
25 Geographic & Product Expansion Southern California • Softwoods • Paint • Solid Surface • Hardwood Products • Pressed Products Pacific Northwest • Lamination • Aluminum • FRP • Fiberglass • Paint • Solid Surface • Hardwood Products • Pressed Products • Industrial • Interior Doors Texas • Softwoods
Slide 26: Capital Expenditures
Capital Expenditures 26 We will continue to invest in our infrastructure to drive enterprise wide efficiency and flex our capital spend when necessary to align with our demand levels ($ in millions) Strategic Capital Spending: New Process / Automation Increased Capacity Increased Efficiencies
Slide 27: Stock Buyback
Stock Buyback 27 388 223 - - 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 28: Balance Sheet Strength
Balance Sheet Strength 28 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 29: Appendix
Appendix
Slide 30: 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% $898 2013 2014 2015 9M-15 9M-16 Sales Growth Sales Sales & Earnings Growth 30 ($ in millions except
Slide 31: Content per Unit – RV Market
Content per Unit 31 RV Market 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 unit *Calculated on TTM basis $697 $1,002 $1,2
Slide 32: Content per Unit – MH Market
Content per Unit 32 MH Market 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 per unit *Calculated on TTM basis $1,500 $1,498 $1,
Slide 33: 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 34: Stock Performance
$28.93 $43.98 $19.29 $29.32 $43.50 $76.30 12/31/13 12/31/14 12/31/15 12/31/16 Pre-Stock Split Close Price Post-Stock Split Close Price Stock Performance 34 As of December 31, 2016, our split-adjusted closing stock price was $76.30, approximately 173% of our pre-split closing stock price of $43.98 on
Slide 35: 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 36: 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 37: Acquisition Summary
Acquisition Summary 37 *Projected Annualized Sales as of the acquisition date 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 09/20
Slide 38: Acquisition Summary
Acquisition Summary 38 *Projected Annualized Sales as of the acquisition date Date Completed Business Net Purchase Price Annualized Sales* Segment Industry Products 02/2016 Parkland Plastics $25.0 MM $30 MM Manufacturing RV & Industrial Polymer-based products including wall panels, lay-in ceiling pa
Slide 39: Patrick Product Lines – RV Interior
Patrick Product Lines – RV Interior 39 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 40: Patrick Product Lines – RV Exterior
Patrick Product Lines – RV Exterior 40 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 41: Patrick RV Products Growth Potential
Patrick RV Products Growth Potential 41 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 42: Patrick Product Lines – MH Interior & Exterior
Patrick Product Lines – MH 42 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 43: Patrick MH Products Growth Potential
Patrick MH Products Growth Potential 43 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 44: PATRICK
PATRICK _ -
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