Patrick Industries, Inc. · NASDAQ:PATK
Patrick Industries — Investor Presentation (June 2019)
34 slides from Patrick Industries's investor presentation, Jun 4, 2019
Slide 1: Patrick Industries, Inc. Investor Presentation June 2019
Patrick Industries, Inc. Investor Presentation June 2019
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
Slide 3: Company Highlights & Overview
Company Highlights & Overview
Slide 4: Company Snapshot
Company Snapshot Founded in 1959 Key component manufacturer and supplier to the RV, Marine, Housing and Industrial Markets Headquartered in Elkhart, Indiana 2019 LTM Operates coast-to-coast in the U.S. revenue of and in Canada, China and $2.3B the Netherlands Listed on the NASDAQ under 8,200 team me
Slide 5: Market Platform Sales Composition
Market Platform Sales Composition 2017 2018 Q1 2019 RV – 69% RV – 63% RV – 56% Marine – 7% Marine – 12% Marine – 15% MH – 13% MH – 12% MH – 17% Industrial – 11% Industrial – 13% Industrial – 12% Lifestyle & Leisure Travel Trailer, Fifth Wheel, Folding Pontoon, Fiberglass, Trailer, Class A, B, C Ski
Slide 6: Patrick Facility Profile
Patrick Facility Profile Nationwide Network Strategically aligned with OEM customers Operates various manufacturing facilities and distribution centers Geographic concentration of RV, MH & Marine Geographic concentration of RV, MH & Industrial Geographic concentration of MH & Marine Headquarters
Slide 7: Markets Served & Trends
Markets Served & Trends
Slide 8: Economic Fundamentals
Economic Fundamentals Solid trends in macro economic fundamentals signal a continued positive outlook in our industries, albeit we need to stay wary of the volatile economic and political environment which has impacted our markets. Economic Fundamentals Good Caution Unemployment Rate Interest Rates
Slide 9: Demographic Trends Across End Markets
Demographic Trends Across End Markets Favorable Demographic Trends – Lifestyle & Leisure Active, outdoor lifestyle continuing to grow, allowing more time spent with family and friends and gain better access to nature Improved consumer savings levels for discretionary spend items such as RVs and
Slide 10: Population Demographic Trend
Population Demographic Trend A key trending population demographic in the industries we serve began to increase in 2017 indicating future market upside potential in all of our markets. 50,000 Key population demographic begins to decline 48,000 Key population demographic is poised to return to growth
Slide 11: Industry Trends: RV Market
Industry Trends RV Market Favorable Industry Trends Influx of younger, more diverse campers continue to build momentum for the North American outdoor, leisure lifestyle 79 million household campers in the U.S. 7 million new campers have started camping since 2014 83 million millennials in the U.S. 4
Slide 12: Industry Outlook: RV Market
Industry Outlook RV Market (shipments in thousands) RV Wholesale Unit Shipments +29% 505 484 9/11 Attacks 431 +22% 391 384 374 370 353 Gulf War +24% Residential 357 321 Housing Crisis 311 321 321 293 +21% 286 259 255 300 247 248 242 228 237 216 257 252 203 188 173 163 166 1990 1993 1996 1999 2002 20
Slide 13: RV Retail, Wholesale Shipments & Inventories
Source: RV Source: RV& Inventories Retail wholesale shipments: RVIA; RetailRVIA; shipments: wholesale shipments: Wholesale Q1-15 Q1-2015 Retail Q2-15 Q2-2015 +13% +5% Q3-15 Q3-2015 Q4-15 Q4-2015 Inventory Turns Wholesale Q1-16 Q1-2016 Retail RV Shipments Change YoY Q2-16 Q2-2016 +11% Retail Dealer D
Slide 14: RV Content per Unit
RV Content per Unit RV Market $8,000 RV Content per Unit 30% increase (Calculated on a TTM basis) $3,131 $2,414 $2,063 $1,847 $1,617 RV Product Categories TOWABLE MOTORIZED Travel Trailer Fifth Wheel Class A Class B & C ASP $22,000 ASP $50,800 ASP $160,900 ASP $97,700 • 88% of all wholesale shipment
Slide 15: Industry Trends: Marine Market
Industry Trends Marine Market Favorable Industry Trends Increased outdoor lifestyle and core recreational boater demand $10.5 Billion retail sales of new powerboats in 2018 36% (142 million) of U.S. adult population participated in recreational boating in 2017 12 million registered boats in the U.S.
Slide 16: U.S. Marine Outlook
U.S. Marine Outlook Marine Market Industry Volume 600,000 500,000 Average age of a used boat is approximately 25 years 400,000 300,000 1965-1991 Average 401,000 200,000 1992-2006 Average 306,000 100,000 - 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 1965
Slide 17: Marine Content per Unit
Marine Content per Unit Marine Market $7,500 Patrick Marine Content per Powerboat Retail Unit (Calculated on a TTM Basis) 118% increase $1,490 $683 $218 $116 Marine Powerboat Product Categories Our products are primarily used in the traditional powerboat market which we view as the following four ca
Slide 18: Industry Trends: MH Market
Industry Trends MH Market Favorable Industry Trends Excellent alternative to the traditional “stick” built home 9 million households with 22 million people living in manufactured homes 80% of all new homes sold under $150,000 are MH $49 per sq. ft. average structure cost compared to $107 for a singl
Slide 19: Industry Outlook: MH Market
Industry Outlook MH Market (shipments in thousands) 193 MH Wholesale Unit Shipments 168 147 131 131 118 99 96 93 97 82 81 71 60 64 50 50 52 55 MH Units MH % of Single Family Home Starts The MH industry continues to perform at historical lows reflecting the residual impacts from the residential housi
Slide 20: MH Content per Unit
MH Content per Unit MH Market MH Content Per Unit (Calculated on a TTM basis) 43% increase $8,500 $3,415 $2,382 $2,015 $1,718 $1,787 Single-Section Homes Multi-Section Homes 50% of 2017 market 50% of 2017 market Avg. Sales Price (2016): $47,000 Avg. Sales Price (2016): $90,000 Source: MHI / IBTS *10
Slide 21: Industry Trends: Industrial Market
Industry Trends Industrial Market Favorable Industry Trends Housing starts are well below the prior peak and there continues to be pent-up demand, providing continued runway in the new housing market 60% of Patrick’s Industrial sales are linked to the residential housing market 4% increase in single
Slide 22: Industry Outlook: Industrial Market
Industry Outlook Industrial Market Diversification and Annual New Housing Starts (starts in thousands) Adjacent Markets Leverage our 2,500 manufacturing and distribution 2,000 capabilities, geographic footprint 1,500 and product expertise to 1,000 penetrate adjacent markets and 500 identify new sale
Slide 23: Growing Housing Demand
Source: U.S. NAHB, U.S. Census, Source: MHI GrowingHousing Demand 1990 75% 25% 1990 1991 83% 17% – 2000 2000 25% Average= 1992 86% 14% 1993 87% 13% 1994 82% 18% 1995 79% 21% 1990 1996 79% 21% Total Starts Housing New – 1997 77% 23% 2007 1.5MM Average= 1998 79% 21% 1999 79% 21% Single FamilySingle 20
Slide 24: Growth Initiatives & Capital Allocation Strategy
Growth Initiatives & Capital Allocation Strategy
Slide 25: Capital Allocation Strategy
Capital Allocation Strategy Our capital allocation strategy is centered around the utilization of a balanced disciplined leverage position, strong cash flows and capital resources to grow and reinvest in the business model Capital Stock Debt Acquisitions Expansion Expenditures Repurchases Reduction
Slide 26: Organic and Strategic Growth
Organic and Strategic Growth Strong sales growth continues to be evident and reflects organic and strategic impact leading to more balanced and diverse end-markets Sales Growth Trends Revenue Mix Average annual organic growth of 15% 15% 12% 12% 11% 11% 12% 11% 13% 13% 16% 15% 14% 13% 12% 4% 19% 17%
Slide 27: Acquisition Execution
Acquisition Execution Demonstrated ability to source, acquire and integrate while increasingly executing on opportunities across diverse end-markets Acquisition Momentum Acquisition End-Market Mix ($ in millions) 5% $319MM Avg. 6% 5% 9% 6% 1% 5% 3% Revenues Acquired 8% 21% 21% 11% 28% $568 30% 7% 4%
Slide 28: Geographic and Product Expansion
Geographic and Product Expansion We have executed on 8 geographic expansions over the last 4 years with expansion opportunities of $500MM market potential Targeted Product Lines: . Lamination . Solid Surface . Aluminum . Hardwood Products . FRP . Pressed Products . Fiberglass . Interior Doors . Pain
Slide 29: Capital Expenditures
Capital Expenditures We will continue to invest in our infrastructure to drive efficiency and capacity, and flex our capital spend when necessary to align with our demand levels Annual Capital Spending ($ in millions) $34.5 $25-$30 $22.5 $15.4 $8.7 $7.9 $8.0 $6.5 Maintenance capex $4.2 approximately
Slide 30: Consistent Sales & Earnings Growth
Consistent Sales & Earnings Growth ($ in millions except per share data) Sales Growth Earnings Growth 2014 – 2018 2014 – 2018 CAGR = 32% CAGR = 41% +38% $2,319 +42% $2,263 $4.93 $4.63 +34% +40% +43% $120 $1,636 +34% $3.48 $111 +33% +42% $2.43 54% $1,222 +29% +25% $1.81 $86 $1.27 +24% $920 32% $736 +
Slide 31: Cash Flow Generation and Growth
Cash Flow Generation and Growth ($ in millions except per share data) Strong free cash flow generation provides flexibility across operational, financial and strategic objectives Cash Flows from Free Cash Flow Free Cash Flow per Share Operating Activities $6.81 $200 $166 $3.57 $97 $100 $3.14 $82 $77
Slide 32: Margin Expansion
Margin Expansion ($ in millions) Consistent growth and improvement in gross and operating margins 18.4% 17.1% 16.5% 16.6% 16.1% 15.0% 15.3% $416 14.4% 10.7% $279 7.9% 7.6% 7.4% 7.5% 6.8% 7.0% 6.2% $202 $178 4.4% $152 $119 $122 2.3% $91 $91 $66 $70 $44 $51 $30 $6 $13 $27 $41 2010 2011 2012 2013 2014
Slide 33: Leverage Capacity
Leverage Capacity We expect to continue to utilize and maintain a disciplined leverage position and our cash flows in alignment with our capital allocation strategy and financing covenants Leverage Ratio 5.0 (1) 4.0 $249MM of $338MM of Acquisitions & Acquisitions & $30MM of $17MM of $140MM of $72MM
Slide 34: Patrick Industries, Inc.
PAT IRICK< INDUSTRIES, INC. oe
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