Patrick Industries, Inc. · NASDAQ:PATK
Patrick Industries — Investor Presentation (June 2020)
39 slides from Patrick Industries's investor presentation, Jun 3, 2020
Slide 1: Investor Presentation June 2020
INVESTOR PRESENTATION June 2020
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains certain statements related to future results, 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. These forwa
Slide 3: Company Overview & Highlights
COMPANY OVERVIEW & HIGHLIGHTS Investor Presentation
Slide 4: Key Messages
KEY MESSAGES 01 02 03 04 05 Market leader in Leadership team Flexible, high Disciplined cost Strong balance our primary with deep industry variable cost management sheet with no market sectors; experience and business model to balanced with near-term debt uniquely proven track drive operational stra
Slide 5: Patrick Industries at a Glance
PATRICK INDUSTRIES AT A GLANCE (NASDAQ: PATK) Key Component Manufacturer and Supplier to RV, Marine, Manufactured Housing and Industrial Markets KEY FACTS SUSTAINABLE COMPETITIVE ADVANTAGES Founded 1959 Experienced management team with an average of 20+ years of industry experience Headquartered Elk
Slide 6: Successfully Transformed Our Business
SUCCESSFULLY TRANSFORMED OUR BUSINESS Transformed through acquisitions into a scaled and diversified value-added player across multiple end markets, positioning the Company to perform well through the cycle 2007 2019 Revenue $370MM $2,337MM Gross Margin 11.9% 18.1% Adj. EBITDA / % of $6MM / 2% $250M
Slide 7: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM Andy Nemeth John Forbes Kip Ellis Jeffrey Rodino Courtney Blosser President & Interim CFO EVP – Operations EVP – Sales & EVP – Human CEO 2020; Patrick Board & COO CSO Resources & CHRO Joined: 1996 Member since 2011 2016 2009 2009 o Average management team industry experie
Slide 8: Strategic End Market Overview
STRATEGIC END MARKET OVERVIEW Sales Composition ($MM) Lifestyle & Leisure Housing & Industrial RV Marine MH Industrial Net Sales (LTM as of 3/29/20) $1,265MM $316MM $443MM $294MM $2,337 $2,318 $2,263 Areas of Expertise 12% 13% Lamination/Custom Components ✔ ✔ ✔ 13% Hard/Softwoods Cabinetry ✔ ✔ ✔ 12%
Slide 9: Leading Market Position in All Product Categories
LEADING MARKET POSITION IN ALL PRODUCT CATEGORIES Significant organic growth opportunities with current product categories in RV, Marine and MH markets; addressable industrial market is very large and fragmented, resulting in significant growth opportunities Recreational Vehicle Marine Primary Marke
Slide 10: Clear Strategic Path Forward for Profitable Growth
CLEAR STRATEGIC PATH FORWARD FOR PROFITABLE GROWTH Pursue Execute Disciplined Focus on Exercise a Prudent Organic Growth Acquisition Strategy Geographic Expansion Financial Policy o Invest in internal growth o Leverage fragmentation in o Leverage existing product o Use strong cash flow to via cross-
Slide 11: Increased Focus on ESG Responsibilities and Best Practices
INCREASED FOCUS ON ESG RESPONSIBILITIES AND BEST PRACTICES Environmental o Established transportation / resource usage program to reduce costs, fuel consumption and emissions o Build leading safety culture with continuous improvement and training o Ongoing conservation efforts to reduce waste, recyc
Slide 12: COVID-19 Response and Update
COVID-19 RESPONSE AND UPDATE Investor Presentation
Slide 13: Our Strategic Response to the COVID-19 Pandemic
OUR STRATEGIC RESPONSE TO THE COVID-19 PANDEMIC COMPANY-WIDE ACTIONS Health Supporting Cost Containment Operational and Safety Our Communities and Financial Measures Efficiencies Created COVID-19 Task Force Donating PPE to hospitals, Voluntary compensation Suspended operations at and Busines
Slide 14: Well Positioned for the Near- and Long Term
WELL POSITIONED FOR THE NEAR- AND LONG TERM Great Recession Response to Recession Better Positioned Today o Portfolio consisted of commodity- o Aggressive fixed cost reduction and o Engineered, value-added, brand- based product lines consolidated certain operations centric product portfolio o Low ma
Slide 15: Downturn Playbook
DOWNTURN PLAYBOOK FLEXIBLE COST CONTAINMENT ADDITIONAL BUSINESS MODEL ACTIONS TAKEN LEVERS AVAILABLE o High variable cost model Voluntary wage reductions for o Fixed overhead reductions − >80% variable costs the executive management o Variable compensation team and Board of Directors' reductions o
Slide 16: Market Outlook – 2020
MARKET OUTLOOK – 2020 Q1 Q2 Q3 Q4 Initial Impact Significant Impact Stabilization/Recovery Recovery • Dealer inventory levels • April OEM shutdowns • OEM production normalizes calibrated dramatically impacted • Pent-up demand and long-term benefits from lifestyle and RV • OEM production curtailed pr
Slide 17: Favorable Long-Term Demographic Trends
FAVORABLE LONG-TERM DEMOGRAPHIC TRENDS Investor Presentation
Slide 18: Strong, Favorable Demographic Trends Across End Markets
STRONG, FAVORABLE DEMOGRAPHIC TRENDS ACROSS END MARKETS Lifestyle and Leisure Housing and Industrial o Participation in outdoor activities of U.S. population o U.S. adult population estimated to expand by 12MM has averaged 49% over the last five years between 2019 – 2024 o Improved consumer savings
Slide 19: Key Population Demographic Supports Future Market Upside Potential
9 1 Specific Specific population is within familybuilding stages of lifecycle INCREASING InvestorPresentation Company, Euromonitor, Sources: RVIA & TheNews 36,000 38,000 40,000 42,000 44,000 46,000 48,000 50,000 1990 Key Population Demographic Supports Future Market Upside PotentialUpside Market Fut
Slide 20: End Market Trends
END MARKET TRENDS Investor Presentation
Slide 21: Diverse End Market: RV End Market Overview
DIVERSE END MARKET WITH FAVORABLE SECULAR TRENDS RV End Market Overview o Despite further drawback, 2019 marked the fourth most historical units ever shipped o Shipments of wholesale units expected to decline ~21% in 2020 reflecting market disruption related to COVID-19 in 1H20 U.S. Wholesale Unit S
Slide 22: Diverse End Market: Marine End Market Overview
DIVERSE END MARKET WITH FAVORABLE SECULAR TRENDS Marine End Market Overview o 1M boats are expected to be retired in the next 3 – 4 years due to increasing average age of boats in service (estimate 25 years) o $10.5B in retail sales of new powerboats in 2018 U.S. Retail Unit Shipments (000s) Marine
Slide 23: Diverse End Market: Manufactured Housing Overview
DIVERSE END MARKET WITH FAVORABLE SECULAR TRENDS Manufactured Housing End Market Overview o Demand for new construction o Pent up housing demand; improving credit combined with low inventory and affordability to drive continued growth o Shipments of wholesale units expected to decline ~17% in 2020 M
Slide 24: Diverse End Market: Industrial End Market Overview
DIVERSE END MARKET WITH FAVORABLE SECULAR TRENDS Industrial End Market Overview o Expanded portfolio of products, driven primarily through acquisitions, allows Patrick to capture more of forecasted growth o Due to our array of capabilities and diversified geographic presence, we can shift capacity t
Slide 25: Financial Overview
FINANCIAL OVERVIEW Growth Initiatives and Capital Allocation Strategy Investor Presentation
Slide 26: Strong Trajectory of Sales and Earnings Growth
STRONG TRAJECTORY OF SALES AND EARNINGS GROWTH Sales Growth ($MM) Earnings Growth $200 $6.00 $2,263 $2,337 $2,318 +42% $180 $4.93 +3% $5.00 +38% $160 (22%) +43% $1,636 $140 $3.85 $3.86 $3.48 $120 $4.00 $120 +34% $1,222 +34% +40% $100 $90 $90 $3.00 $2.43 $86 +33% +42% (25%) $920 $80 $1.81 +54% $56 $2
Slide 27: Q1 2020 Financial Highlights
Q1 2020 FINANCIAL HIGHLIGHTS COVID-19 IMPACT o Net sales of $589.2MM decreased 3.1% o Sales decline primarily attributable to lost production days and o Operating income of $39.3MM increased 9.6% business disruption in our end markets in late Q1 2020 Income o Operating margin expanded 80bps to 6.7%
Slide 28: Track Record of Strong Cash Flow Generation
TRACK RECORD OF STRONG CASH FLOW GENERATION Cash Flow from Free Cash Flow1 ($MM) Free Cash Flow per Share2 Operating Activities ($MM) $250 $8.00 $180 $166 $165 $7.08 350% $160 $152 $7.00 $6.81 $200 $6.54 $200 $192 300% $140 $178 $6.00 $120 250% $5.00 $150 $100 200% $82 $4.00 $3.57 $77 $97 $100 $80 $
Slide 29: Strong Balance Sheet and Liquidity
STRONG BALANCE SHEET AND LIQUIDITY Strength of our cash flows, combined with our liquidity, provides us with the flexibility to navigate a variety of scenarios through these unprecedented times o $550MM Senior Secured Revolver NET LEVERAGE1 ($MM) Debt o $100MM Term Loan ($97.5M o/s at 3/29/20) Struc
Slide 30: Disciplined Capital Allocation Strategy
DISCIPLINED CAPITAL ALLOCATION STRATEGY Our capital allocation strategy is centered around the utilization of strong cash flows, a balanced disciplined leverage position, and capital resources to grow and reinvest in the business model Historical Capital Allocation ($MM) Future Priorities Opportunis
Slide 31: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS Driving operational efficiencies with manufacturing flexibility across 01 all four end markets Strong leadership team with proven ability to manage through challenging 02 economic conditions 03 Uniquely positioned to benefit from continued shift toward outdoor activities Pr
Slide 32: Appendix
APPENDIX Investor Presentation
Slide 33: End Market Product Categories
END MARKET PRODUCT CATEGORIES RV PRODUCT CATEGORIES1 TOWABLE MOTORIZED Shipments: 88% Wholesale | 60% Retail Value Shipments: 12% Wholesale | 40% Retail Value Travel Trailer | ASP: $22,900 Fifth Wheel | ASP: $49,000 Class A | ASP: $212,800 Class B & C | ASP: $95,600 Total Retail Value of Shipments i
Slide 34: Patrick Product Lines: RV Exterior
PATRICK PRODUCT LINES: RV EXTERIOR Front & Dash Panels Bow Trusses Exterior Speakers Rear Caps Additional Product Lines: o Softwoods o Full Body Paint o Aluminum Gauges o Steel Gauges o Mill Finish & Pre-painted Aluminum and Steel o Slit & Embossed Steel o FRP Coil & Sheet o Trim Panels o Fuel Syste
Slide 35: Patrick Product Lines: RV Interior
PATRICK PRODUCT LINES: RV INTERIOR Closet & Passage Fiberglass Bath Fixtures Doors & Shower Doors Closet Hardware Lighting Microwaves Backsplashes Mattresses Laminated Panels Electronics Laminate & Vanity/Wall & Printed Vinyl Ceramic Flooring Mirrors Additional Supplied Products: Furniture o Exit Li
Slide 36: Patrick Product Lines: Marine
PATRICK PRODUCT LINES: MARINE Wire Harnesses Electronics Wire Screens Aluminum Fuel & Marine Growth: Holding Tanks o Wind Shields (Glass) o Plastic Fuel & Holding Tanks o Fuel System Related Components Ladder Helms o Plastic Seat Bases & Components Dash Assemblies o Vinyls (Biminis, Covers) o Fabric
Slide 37: Patrick Product Lines: Manufactured Housing
PATRICK PRODUCT LINES: MANUFACTURED HOUSING Kitchen & Bath Fiberglass Bath Fixtures & Shower Faucets & Sinks Doors & Enclosures Gypsum (Drywall & Drywall Wrapped Profile Moldings Plumbing Products Finishing Products) Siding Trusses Ceiling Fans Interior & Exterior Decorative Lighting Fixtures Interi
Slide 38: Non-GAAP Reconciliations
38 NON-GAAP RECONCILIATIONS Reconciliation of Cash Flow from Operations to Free Cash Flow ($ in millons) 2007 2015 2016 2017 2018 2019 LTM 3/29/20 Cash Flow from Operations $ 23 $ 67 $ 97 $ 100 $ 200 $ 192 $ 178 Less: Capital Expenditures (3) (8) (15) (22) (34) (28) (26) Free Cash Flow $ 20 $ 59 $ 8
Slide 39: Non-GAAP Reconciliations (Continued)
NON-GAAP RECONCILIATIONS (CONTINUED) Reconciliation of Net Income to EBITDA to Adjusted EBITDA ($ in millons) 2007 2019 LTM 3/29/20 Net income (loss) $ (5.8) $ 89.6 $ 89.9 + Depreciation & amortization 6.4 62.8 64.4 + Interest expense, net 6.5 36.6 38.1 + Income taxes (credit) (2.8) 28.3 29.9 EBITDA
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