Patrick Industries, Inc. · NASDAQ:PATK
Patrick Industries — Investor Presentation (April 2019)
38 slides from Patrick Industries's investor presentation, Apr 9, 2019
Slide 1: Patrick Industries, Inc. Investor Presentation April 2019
Patrick Industries, Inc. Investor Presentation April 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 2018 revenue Operates coast-to-coast in the U.S. and in British Columbia, China and of $2.3B The Netherlands Listed on the NASDAQ under 8,200 t
Slide 5: 2018 Highlights
2018 Highlights Earnings Cash Flow Increased Reinvestment Acquisitions Growth Generation Liquidity Sales growth of 38% - $1.64B $2.26B RV content per unit grew 33% - $2,234/unit $2,965/unit MH content per unit grew 24% - $2,289/unit $2,849/unit Marine content per unit grew 139% - $532/
Slide 6: Market Platform Sales Composition
Market Platform Sales Composition 2017 2018 Q4 2018 RV – 69% RV – 63% RV – 58% Marine – 7% Marine – 12% Marine – 15% MH – 13% MH – 12% MH – 14% Industrial – 11% Industrial – 13% Industrial – 13% Lifestyle & Leisure Travel Trailer, Fifth Wheel, Folding Pontoon, Fiberglass, Trailer, Class A, B, C Ski
Slide 7: 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 8: Markets Served & Trends
Markets Served & Trends
Slide 9: Economic Fundamentals
Economic Fundamentals Solid trends in macro economic fundamentals in 2018 signal a continued positive outlook in our industries, albeit we need to stay wary of the volatile economic and political environment which could impact our markets. Favorable Economic Fundamentals Unemployment Rate Strong c
Slide 10: 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 11: 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 12: Patrick Product Offering: RV Market
Patrick Product Offering RV Market RV segment sales comprised 63% of total Patrick sales in 2018 Laminated and Hardwoods & Electrical RV Painting and Distribution, Fiberglass Softwoods, System Fabricated Transportation Products Cabinetry, and Components Aluminum and Design Fabricated & Products Serv
Slide 13: RV Content per Unit
RV Content per Unit RV Market $8,000 RV Content per Unit (Calculated on a TTM basis) 33% increase $2,965 $2,234 $2,039 $1,789 $1,536 RV Product Categories TOWABLE MOTORIZED Travel Trailer Fifth Wheel Class A Class B & C ASP $22,035 ASP $50,768 ASP $160,940 ASP $97,663 • 88% of all wholesale shipment
Slide 14: RV Retail & Inventories
RV Retail & Inventories RV Market 2019 Expectations • RVIA projects 5% Wholesale +5% Wholesale +15% Wholesale +17% Wholesale (4%) decline in RV Retail +13% Retail +11% Retail +13% Retail +4% wholesale shipments vs. 2018 • Except for 2017 & Dealer Re-Calibration 2018, wholesale shipments expected to
Slide 15: 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 77 million household campers in the U.S. 6 million new campers have started camping since 2014 83 million millennials in the U.S. 4
Slide 16: Industry Outlook: RV Market
Industry Outlook RV Market RV Wholesale Unit Shipments (shipments in thousands) +29% 505 484 431 9/11 Attacks +22% 391 384 374 370 353 +24% Residential 357 321 Housing Crisis 311 321 321 293 Gulf War +21% 286 259 255 300 247 248 242 228 237 216 257 252 203 188 173 163 166 1995 1996 1997 1998 1999 20
Slide 17: Patrick Product Offering: Marine Market
Patrick Product Offering Marine Market Marine segment sales comprised 12% of total Patrick sales in 2018 Fiberglass Wire Aluminum Metal Design Helm and Harnesses Fuel Tanks Fabrication Services Dash Assemblies 17
Slide 18: Marine Content per Unit
Marine Content per Unit Marine Market Patrick Marine Content per Powerboat Retail Unit $7,500 (Calculated on a TTM Basis) 139% increase $1,270 $532 $179 $111 Marine Powerboat Product Categories Our products are primarily used in the traditional powerboat market which we view as the following four ca
Slide 19: Industry Trends: Marine Market
Industry Trends Marine Market Favorable Industry Trends Increased outdoor lifestyle and core recreational boater demand 36% (142 million) of U.S. adult population participated in recreational boating in 2017 12 million registered boats in the U.S. in 2017 25 years average age of a boat on the water
Slide 20: 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 1992-2006 200,000 Average 306,000 100,000 - 1970 1971 1972 1973 1979 1980 1981 1987 1988 1989 1990 1996 1997 1998 2004 2005 2006 2007 2013
Slide 21: Patrick Product Offering: MH Market
Patrick Product Offering MH Market MH segment sales comprised 12% of total Patrick sales in 2018 Fiberglass Hardwoods & Laminated, Electrical and Distribution & products Softwoods, Gypsum and Lighting Design Cabinetry, and Roofing Services Fabricated & Products Solid Surface Countertops 21
Slide 22: MH Content per Unit
MH Content per Unit MH Market Our focus on strategic acquisitions and organic growth has resulted in significant increases in our content per unit and sales outpacing our respective markets MH Content Per Unit (Calculated on a TTM basis) $8,500 24% increase $2,849 $2,289 $1,966 $1,825 $1,692 Single-
Slide 23: Growing Housing Demand
Source: U.S. NAHB, U.S. Census, Source: MHI GrowingHousing Demand 1990 75% 25% 1991 83% 17% 1990 1992 86% 14% – 1993 87% 13% 2000 2000 25% Average= 1994 82% 18% 1990 1995 79% 21% – 1996 79% 21% 2007 1.5M Average= 1997 77% 23% 1998 79% 21% Single FamilySingle 1999 79% 21% 2000 78% 22% Total Starts Ho
Slide 24: 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 25: Industry Outlook: MH Market
Industry Outlook MH Market (shipments in thousands) 193 MH Wholesale Unit Shipments 168 147 131 131 118 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 housing
Slide 26: Patrick Product Offering: Industrial Market
Patrick Product Offering Industrial Market Industrial segment sales comprised 13% of total Patrick sales in 2018 Solid Surface Shower Doors Slotwall FRP and Distribution & and Fabricated and Fabricated Polymer Panels Design Countertops Glass, Tubs Services and Showers 26
Slide 27: 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 3% increase in single
Slide 28: Industry Outlook: Industrial Market
Industry Outlook Industrial Market Diversification and Annual New Housing Starts (starts in thousands) Adjacent Markets 2,500 Leverage our manufacturing and 2,000 distribution capabilities, 1,500 geographic footprint and product 1,000 expertise to penetrate adjacent 500 markets and identify new sale
Slide 29: Growth Initiatives & Capital Allocation Strategy
Growth Initiatives & Capital Allocation Strategy
Slide 30: Capital Allocation Strategy
Capital Allocation Strategy Our capital allocation strategy is centered around the utilization of a balanced leverage position, strong cash flows and capital resources to grow and reinvest in the business model Capital Stock Debt Acquisitions Expansion Expenditures Repurchases Reduction . . . Execut
Slide 31: 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% 2% 14% 15% 12% 12% 11% 11% 12% 11% 13% 4% 15% 14% 13% 13% 12% 17% 1
Slide 32: 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 33: Geographic and Product Expansion
Geographic and Product Expansion Focus on expansion opportunities with $500MM market potential Targeted Product Lines: . Lamination . Solid Surface . Aluminum . Hardwood Products . FRP . Pressed Products . Fiberglass . Interior Doors . Paint . Plastics . Shower Doors . Bath & Closet Systems 1 PACIFI
Slide 34: Capital Expenditures
Capital Expenditures We will continue to invest in our infrastructure to drive efficiency and capacity, and flex our capital spend when necessary to align with our demand levels Annual Capital Spending ($ in millions) $34.5 $22.5 $15.4 $8.7 $7.9 $8.0 $6.5 Maintenance capex $4.2 $0.3 $1.4 $2.4 approx
Slide 35: Consistent Sales & Earnings Growth
Consistent Sales & Earnings Growth ($ in millions except per share data) Sales Growth Earnings Growth 2013 – 2018 2013 – 2018 CAGR = 31% CAGR = 38% +42% 38% $4.93 $2,263 +43% $3.48 34% +34% $1,636 +42% $2.43 40% 33% +29% $1.81 +11% $120 $1,222 $1.27 54% 25% $0.99 32% $86 24% $920 38% 36% 28% $56 $73
Slide 36: Cash Flow Generation and Growth
Cash Flow Generation and Growth ($ in millions) Strong free cash flow generation provides flexibility across operational, financial and strategic objectives Cash Flows from Free Cash Flow Working Capital Operating Activities $229 $200 $166 $151 $97 $100 $82 $77 $96 $87 $67 $59 $46 $65 $39 2014 2015
Slide 37: 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 38: Patrick Industries, Inc.
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