Investor Presentation March 2015 NASDAQ: PATK
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. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Further information concerning the Company and its business, including factors that potentially could materially affect the Company’s financial results, is contained in the Company’s filings with the Securities and Exchange Commission. This presentation includes market and industry data, forecasts and valuations that have been obtained from independent consultant reports, publicly available information, various industry publications and other published industry sources. Although we believe these sources are reliable, we have not independently verified the information and cannot make any representation as to the accuracy or completeness of such information. We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this presentation or to reflect any change in our expectations after the date of this presentation or any change in events, conditions or circumstances on which any statement is based. 2
Acquires Adorn Holdings, Raises capital from majority Inc. – the largest shareholder and completes Refinances Credit Completes Refinancing acquisition in the Refinancing via $50MM ABL Company Facility led by $80MM Leverage Based Credit Facility led by Wells Company’s history (5/07) founded Wells Fargo to Credit Facility led by Wells Fargo to execute on strategic $125MM (6/14), Fargo (10/12) growth and acquisition plans to $165MM (3/11) (11/14) & to $185MM (2/15) Company taken public Todd Cleveland named (NASDAQ) President (‘08) /CEO (‘09) 1959 1961 1968 2007 2008 2009 2010 2011 2012 2013 2014 2015 Completes $110MM Leverage Based Credit Facility in an 8 bank syndication Company drives its Announces Stock Repurchase Plan (02/13) led by JPMorgan (5/07) Organizational with increases announced in 2/14 and 2/15 Strategic Agenda (OSA) and Customer First Date of Performance Oriented Incorporation Culture Acquisition Highlights (2010-2015): 20 companies $172MM aggregate purchase price Company issues shares in private placement and conducts Rights Offering $346MM annualized sales to pay off subordinated debt Primarily RV industry-based 5
Leading national RV market: 74% of 2014 revenues manufacturer and - Includes laminated panels, countertops, fabricated supplier of building and aluminum and FRP products, wrapped mouldings, cabinet component products to doors, wiring/electrical/plumbing, furniture, interior passage doors, exterior graphics and RV painting, interior lighting, wall the RV, MH & Industrial coverings, fiberglass RV caps, bath fixtures and small markets components, mattresses, and simulated wood and stone products. Headquartered in Elkhart, Indiana – the MH market: 15% of 2014 revenues “RV Capital of the - Includes wall/ceiling panels, pressed and hardwood doors, World” wiring/electrical/plumbing, cement siding, drywall and roofing products, lighting, wall coverings, and bath and shower surrounds. 32 manufacturing and 16 distribution centers Approximately 3,200 Industrial market: 11% of 2014 revenues employees - Includes retail and commercial fixtures, kitchen cabinets, solid surface countertops, and office and residential furniture. Strong customer relationships 6
Nationwide network of manufacturing and distribution centers serving the RV, MH and Industrial markets Majority of Patrick’s businesses are strategically located in Indiana to serve the major RV OEMs: • Approximately 85% of all RVs manufactured in the U.S. in 2013 were produced in Indiana • Close proximity to RV OEMs enables just-in-time delivery and the realization of cost efficiencies for customers, suppliers and manufacturers. RV Production Source: Recreation Vehicle Industry Association (RVIA) 7
• $16.8 billion addressable expanding RV & MH markets Markets • Emerging industrial and housing market • Continuously expanding product and company portfolio through Business Model organic growth and growth through acquisitions • Execution of strategic plan and capital allocation • Team driven by performance-oriented culture with continuous Leadership improvement focus on driving margins and profitability • Strong relationships with broad array of customers • High variable cost concentration based operating structure Operations providing ability to maximize levers to manage through business cycles Financial • Strong financial performance focusing on revenue and earnings growth while maintaining a healthy balance sheet and delivering Performance free cash flow Shareholder • Management focus on increasing shareholder value • Returning capital to shareholders is strategic part of capital Returns allocation strategy 8
2012 Actual Industry 2014 Actual Industry 2013 Actual Industry Sales Breakdown Sales Breakdown Sales Breakdown $437.4 million $594.9 million $735.7 million 12% 11% 12% 15% 16% 19% 72% 69% 74% RV MH Industrial 10
Sales Growth 2009 -2014 ($ in millions) $800 $23 $18 $700 $174 $600 $500 $400 Legacy Patrick $308 $736 $300 $200 $213 $100 $0 11
Net Income and Diluted EPS Growth 2010 -2014* Sales Growth 2010 -2014 ($ in millions) ($ in millions except EPS) $800 $2.87 $35 $3.00 $2.19 $700 $30 $2.00 $1.38 $600 $25 $1.00 $0.53 $500 $20 ($0.12) $0.00 $400 $31 $15 $736 ($1.00) $24 $300 $595 $10 $15 $437 ($2.00) $200 $5 $308 $5 $278 $100 ($3.00) $0 ($1) $0 ($5) ($4.00) 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 RV CAGR: 10% MH CAGR: 6% Housing Starts CAGR: 14% *Net Income and EPS calculations based on adjusted net income. 12
18% 15.2%15.0%15.0% 15.2%15.1%15.3% 15.4%15.7% 16.0% 16.1% $140 15.5% 15.7% 16% 14.4% $120 13.5% 14% $119 11.8% 10.8%11.1%11.3% 12% $100 10.9% 10.7%10.9% ($ millions) 10% Margin % $91 $80 8% 6.9% 6.9% 7.0% 7.0% 6.8% 6.7% 6.8% $60 5.9% 6.2% 6.2% 6.2% 6.3% 6% $66 4.4% $40 3.7% 3.5% 4% 3.0% 3.0% $44 2.3% $51 2.2% $41 $20 1.6% $23 2% $30 $27 0.6% $13 $6 $1 0% $0 Gross Margin Operating Income Gross Margin % Operating Margin % 13
• ROA of 12.3% for 2014 from (1.6%) in 2010 Maximize Returns • ROE of 30.6% for 2014 from (6.7%) in 2010 to Company • ROIC of 15.4% for 2014 from (2.2%) in 2010 • Acquired 20 companies since 2010 with Grow Market approximately $350MM of annualized sales PATK Stock Price Share • RV content per unit growth of 23% compounded $60.00 annually to $1,536 for Q4 ’14 TTM since 2010 $50.00 $40.00 • Gross margin increase from 10.7% in 2010 to 16.1% Fixed Costs $30.00 for 2014 Leverage $20.00 • Operating margin increase from 2.3% in 2010 to 7.0% for 2014 $10.00 $0.00 Dec-11 Dec-12 Dec-13 Dec-14 Feb-15 Closing Stock Price $4.10 $15.56 $28.93 $43.98 $55.25 • Since February 2013, 882,580 shares repurchased Return Capital to at average price of $29.07 – 53% below February TSR 116% 280% 86% 52% 26% Shareholders ‘15 closing stock price of $55.25 generating 20% rate of return 2011 – Feb ‘15 Total Shareholder Return (TSR) over 1200% Maintain Healthy • Reduced leverage position from 3.9x in Q1 ’10 to Balance Sheet 1.4x in Q4 ‘14 14
2005 2011 # of U.S. RV-owning households 7.9 million 8.9 million Average age of typical RV owner 49 years 48 years Median income of Rvers $ 62,000 Ownership rates: 35 - 54 years (fastest growing segment) 9.0% 11.2% 55 years or older (highest rate of RV ownership) 8.6% 9.3% RV OEMs provide optimal mix of size, amenities and price points for all consumers. Lifestyle trends spur demand for RVs: “mini” vacations with trips in close proximity to home. Shift in U.S. culture toward more RV-related activities 70% of current RV owners plan to purchase another RV to replace their current unit. Typical RV family vacation is 23%-59% less expensive for a family of four. Fuel prices (for a family of four) would need to increase four times to impact the economic advantage of an RV vacation. Number of consumers between the ages of 55 and 74 are projected to reach 78 million by 2025 (24% higher than in 2012). 10,000 Baby Boomers are projected to turn 65 years old each day from 1/1/11 to 12/31/29. Source: RV Consumer Demographic Profile – 2011 and RVIA 16
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