PATK 8-K
Patrick Industries Inc (PATK)
8-K
2024-10-07
For: 2024-10-07
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April 10, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant To Section 13 OR 15(d) Of The Securities Exchange Act Of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01 Regulation FD Disclosure
The information referenced in this Form 8-K is furnished pursuant to Item 7.01, “Regulation FD Disclosure.” Such information, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
(a) Press Release - Dated October 7, 2024 as contained in Exhibit 99.1
(b) Slides for Investor Presentation as contained in Exhibit 99.2
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit 99.1 – Press Release dated October 7, 2024
Exhibit 99.2 – Slides for Investor Presentation
Exhibit 104 - Cover Page Interactive Date File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PATRICK INDUSTRIES, INC. | ||||||||
| (Registrant) | ||||||||
Date: October 7, 2024 | By: | /s/ Andrew C. Roeder | ||||||
| Andrew C. Roeder | ||||||||
| Executive Vice President - Finance, Chief Financial Officer, and Treasurer | ||||||||
Patrick Industries, Inc. Announces Private Offering of $400 Million of Senior Notes ELKHART, IN – October 7, 2024 — Patrick Industries, Inc. (NASDAQ: PATK) (“Patrick” or the “Company”) today announced its intention to offer, subject to market conditions and other factors, $400 million aggregate principal amount of Senior Notes due 2032 (the “Notes”) in a private placement exempt from registration under the Securities Act of 1933 (“Securities Act”). The interest rate, redemption prices and other terms of the Notes are to be determined upon pricing of the offering. Patrick intends to use the net proceeds from the offering to redeem all of its $300 million aggregate principal amount of 7.500% Senior Notes due 2027, repay a portion of its borrowings under its existing senior secured credit facility and pay fees and expenses in connection with the foregoing. Concurrently with the completion of the offering, the Company plans to amend and restate the credit agreement governing its existing $925 million senior secured credit facility to establish a new $1.0 billion senior secured credit facility consisting of an $875 million revolving credit facility and a $125 million term loan. The maturity date for borrowings under the new senior secured credit facility is expected to be extended to October 2029. The new senior secured credit facility is expected to replace the Company’s existing credit facility that is due to mature in August 2027, with pricing and other material provisions to be finalized following the completion of the pricing of the offering of the Notes described above. This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction. The Notes and related guarantees have not been registered under the Securities Act, or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Any offers of the Notes will be made only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in compliance with Regulation S under the Securities Act. The Notes being offered have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the applicable private offering memorandum. About Patrick Industries, Inc. Patrick (NASDAQ: PATK) is a leading component solutions provider serving the RV, Marine, Powersports and Housing markets. Since 1959, Patrick has empowered manufacturers and outdoor enthusiasts to achieve next-level recreation experiences. Our customer-focused approach brings together design, manufacturing, distribution, and transportation in a full solutions model that defines us as a trusted partner. Patrick is home to more than 85 leading brands, all united by a commitment to quality, customer service, and innovation. Headquartered in Elkhart, IN, Patrick employs approximately 10,000 skilled team members throughout the United States. For more information on Patrick, our brands, and products, please visit www.patrickind.com. Cautionary Statement Regarding Forward-Looking Statements This press release contains certain statements within the meaning of Private Securities Litigation Reform Act of 1995 that are forward-looking in nature, including, without limitation, the completion, timing, terms and use of proceeds of the Notes offering and the proposed new senior secured credit facility. The forward-
looking statements are based on current expectations and our actual results may differ materially from those projected in any forward-looking statement. There can be no assurance that any forward-looking statement will be realized or that actual results will not be significantly different from that set forth in such forward-looking statement. Factors that could cause actual results to differ materially from those in forward- looking statements included in this press release include, without limitation: the ability to complete the terms of the offering and to enter into a new senior secured credit facility on anticipated terms or at all; adverse economic and business conditions, including cyclicality and seasonality in the industries we sell our products; the financial condition of our customers or suppliers; the loss of a significant customer; changes in consumer preferences; declines in the level of unit shipments or reduction in growth in the markets we serve; the availability of retail and wholesale financing for RVs, watercraft and powersports products, and residential and manufactured homes; pricing pressures due to competition; costs and availability of raw materials, commodities and energy and transportation; supply chain issues, including financial problems of manufacturers or suppliers and shortages of adequate materials or manufacturing capacity; the challenges and risks associated with doing business internationally; challenges and risks associated with importing products, such as the imposition of duties, tariffs or trade restrictions; the ability to manage our working capital, including inventory and inventory obsolescence; the availability and costs of labor and production facilities and the impact of labor shortages; fuel shortages or high prices for fuel; any interruptions or disruptions in production at one of our key facilities; challenges with integrating acquired businesses; the impact of the consolidation and/or closure of all or part of a manufacturing or distribution facility; an impairment of assets, including goodwill and other long-lived assets; an inability to attract and retain qualified executive officers and key personnel; the effects of union organizing activities; the impact of governmental and environmental regulations, and our inability to comply with them; changes to federal, state, local or certain international tax regulations; unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise; public health emergencies or pandemics, such as the COVID-19 pandemic; our level of indebtedness; our inability to comply with the covenants contained in the existing senior secured credit facility or the new senior secured credit facility; an inability to access capital when needed; the settlement or conversion of our notes; fluctuations in the market price for our common stock; an inability of our information technology systems to perform adequately; any disruptions in our business due to an IT failure, a cyber-incident or a data breach; any adverse results from our evaluation of our internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; certain provisions in our Articles of Incorporation and Amended and Restated By-laws that may delay, defer or prevent a change in control; adverse conditions in the insurance markets; and the impact on our business resulting from wars and military conflicts, such as war in Ukraine and evolving conflict in the Middle East. There can be no assurance that any forward-looking statement will be realized or that actual results will not be significantly different from that set forth in such forward-looking statement. The Company does not undertake to publicly update or revise any forward-looking statements. Information about certain risks that could affect our business and cause actual results to differ from those express or implied in the forward- looking statements are contained in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and in the Company’s Forms 10-Q for subsequent quarterly periods, which are filed with the Securities and Exchange Commission (“SEC”) and are available on the SEC’s website at www.sec.gov. Each forward-looking statement speaks only as of the date of this press release, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date on which it is made. Prospective purchasers are cautioned not to place undue reliance on these forward-looking statements. Contact: Steve O’Hara Vice President of Investor Relations [email protected] 574.294.7511
Investor Presentation October 7th, 2024
This presentation includes contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified by words such as “estimates,” “guidance,” “expects,” ”anticipates,” “intends,” “plans,” “believes,” “seeks,” “likely” and similar expressions. Forward- looking statements include information with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, industry projections, growth opportunities, acquisitions, plans and objectives of management, markets for the common stock and other matters. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. These risks and uncertainties include, in addition to other matters described in this presentation, the impacts of future pandemics, geopolitical tensions or natural disaster, on the overall economy, our sales, customers, operations, team members and suppliers. Further information concerning the Company and its business, including risk factors that potentially could materially affect the Company’s financial results are discussed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024. We caution readers not to place undue reliance on forward-looking statements. Forward- looking statements speak only as of the date they are made, and 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. USE OF NON-GAAP FINANCIAL MEASURES This presentation contains non-GAAP financial measures. These measures, the purposes for which management uses them, why management believes they are useful to investors, and a reconciliation to the most directly comparable GAAP financial measures can be found in the Appendix of this presentation. Forward-Looking Statements 2
Today’s Presenters Andy Nemeth Chairman & Chief Executive Officer Andy Roeder Chief Financial Officer 3 Matthew Filer Chief Accounting Officer
Company Overview
EMPOWERING ENTHUSIASTS Outdoo r E n th u sia stM arkets 5 Q2’24 TTM NET SALES 45% 17% 31% 7%POWERSPORTS RV HOUSING MARINE ~10,000 TEAM MEMBERS BRANDS 85+ STATES 23 NET SALES (Q2’24 TTM) $3.6B VALUE PROPOSITION Patrick (NASDAQ: PATK) is a leading component solutions provider for the RV, Marine, Powersports and Housing markets Patrick’s goal is to improve the quality of everyday life through better component solutions and building materials. We deliver on this promise by building strong relationships with partners and team members based on trust and proven performance. FREE CASH FLOW (Q2’24 TTM) 1 $348M 1 Non-GAAP metric, see appendix for reconciliation to closest GAAP metric.
6 2010 - 2016 2017 - 2023 2024+ OPTIMIZE OUR LEGACY BUSINESSES DIVERSIFY OUR PORTFOLIO ACCELERATE OUR TRANSFORMATION Leverage realized synergies, utilize innovation playbook, and optimize core capabilities +28% PATK Net Sales CAGR Entered Marine market and invested in higher-engineered and aftermarket products Invest in best-practice software and automation, solidify our powersports presence, and become supplier of choice 2 - 3% Organic Growth Target +13% PATK Net Sales CAGR RV HOUSING RVHOUSING MARINE 2016 % of Net Sales 2023 % of Net Sales Q2’24 TTM % of Net Sales RV HOUSING MARINE POWERSPORTS POWERSPORTS Ongoing Story of Growth
7 Serving the Outdoor Enthusiast and Housing Markets POWERSPORTSRV HOUSING Leading Component Solutions Provider to RV OEMs $1.62B Q2’24 TTM Net Sales 45% % of Net Sales $239M Q2’24 TTM Net Sales 7% % of Net Sales Expanding OEM Relationships Through Customer Service and Scalability $1.10B Q2’24 TTM Net Sales 31% % of Net Sales Growing Component Supplier with Focus on Premium and Utility Segments MARINE Extensive Supplier to Marine OEMs with Growing Aftermarket Presence $631M Q2’24 TTM Net Sales 17% % of Net Sales Outdoor Enthusiast Markets
ESTABLISHED SUPPLIER OF CHOICE FOR RV OEMS MARINE POWERSPORTS HOUSINGRV MARKETS $1.62B NET SALES (Q2’24 TTM) % OF NET SALES (Q2’24 TTM) 45% CABINET DOORS FURNITURE PAINT ALUMINUM SIDEWALLS FIBERGLASS FLOORING LAMINATED PANELS FAUCETS & SINKS SOLAR COUNTERTOPS Featured product categories are only a sampling of Patrick’s capabilities. A more complete listing can be found in our most recent 10-K. 8
POWERSPORTSMARINE HOUSINGRV MARKETS $1,434 $1,287 $1,392 $2,404 $2,593 $1,503 $1,624 2018 2019 2020 2021 2022 2023 Q2'24 TTM RV NET SALES ($ in millions) +2% CAGR 2018-Q2’24 TTM END MARKET NET SALES DRIVERS RV net sales grew 17% y/y in Q2’24, fueled by a 7% improvement in RV wholesale unit shipments1 and market share gains in the quarter Shipments improved as OEMs began to increase production after the cycle likely hit bottom in 2023 MARKET TRENDS • Dealers remain focused on maintaining appropriate inventory given high floorplan costs • Entry-level towable units and preferred brands have led the volume recovery in the RV market in 2024 $2,965 $3,170 $3,235 $4,006 $5,257 $4,800 $4,966 2018 2019 2020 2021 2022 2023 Q2'24 TTM RV CONTENT PER UNIT1 +10% CAGR 2018-Q2’24 TTM Expected Market Bottoming with Low Dealer Inventory Levels 1 Company estimates based on data published by RVIA as of the Company’s reported Q2’2024 earnings on 08/01/2024 CPU increase despite pricing headwinds 9
MARINE POWERSPORTS HOUSINGRV MARKETS LEADING SUPPLIER OF HIGHLY- ENGINEERED, VALUE-ADDED PRODUCTS $631M NET SALES (Q2’24 TTM) % OF NET SALES (Q2’24 TTM) 17% TOWERS AND METAL FABRICATED & BILLET PARTS DESIGN SERVICES FOAM FLOORING ELECTRICAL (DASHES/ HELMS/HARNESS & AUDIO) PLYWOOD CANVAS & PROTECTIVE COVERS FURNITURE TANKS Featured product categories are only a sampling of Patrick’s capabilities. A more complete listing can be found in our most recent 10-K. WINDSHIELDS TRAILER 10
POWERSPORTSMARINE HOUSINGRV MARKETS $274 $329 $339 $665 $914 $783 $631 2018 2019 2020 2021 2022 2023 Q2'24 TTM MARINE NET SALES ($ in millions) END MARKET NET SALES DRIVERS Wholesale powerboat unit shipments were down 27% in Q2’24 leading to a 30% decline in net sales y/y; during the same period ski/wake and pontoon shipments, were down ~ 57% and ~33%, respectively 1 CPU declined partially due to commodity costs passed back to customers and unfavorable mix of shipments in the period MARKET TRENDS • Customers remain cautious due to interest rate headwinds • Higher floorplan costs and lower retail velocity continue to drive dealers’ desire to destock inventory +16% CAGR 2018-Q2’24 TTM $1,169 $1,730 $2,069 $3,356 $4,430 $4,069 $3,935 2018 2019 2020 2021 2022 2023 Q2'24 TTM MARINE CONTENT PER UNIT 1 +25% CAGR 2018-Q2’24 TTM Disciplined OEM Production in Higher Interest Rate Environment 1 Company estimates based on data published by NMMA as of the Company’s reported Q2’2024 earnings on 08/01/2024 11
$239M NET SALES (Q2’24 TTM) % OF NET SALES (Q2’24 TTM) 7% ROOFS/CANOPIES MIRRORS PREMIUM WINDSHIELDS COWLS INTEGRATED DOOR SYSTEMS AUDIO FENDER FLARES SOLIDIFYING INDUSTRY LEADING POWERSPORTS PLATFORM MARINE POWERSPORTS HOUSINGRV MARKETS LEADING PLATFORM OF BRANDS BUMPERS Featured product categories are only a sampling of Patrick’s capabilities. A more complete listing can be found in our most recent 10-K. 12
$103 $122 $239 2022 2023 Q2'24 TTM POWERSPORTSMARINE HOUSINGRV MARKETS POWERSPORTS NET SALES ($ in millions) END MARKET NET SALES DRIVERS Sportech acquisition outperformed our initial expectations in the second quarter Utility side-by-side market remained resilient compared to broader powersports category Expanding partnership with OEMs to drive innovative solutions and improve customer utility MARKET TRENDS • OEMs prioritizing new customer attraction • Creature comforts like HVAC require the doors and cab enclosures Sportech designs and manufactures +75% CAGR 2022-Q2’24 TTM 13
Featured product categories are only a sampling of Patrick’s capabilities. A more complete listing can be found in our most recent 10-K. KEY SUPPLIER TO THE AFFORDABLE HOUSING SECTOR MARINE POWERSPORTS HOUSINGRV MARKETS $1.10B NET SALES (Q2’24 TTM) % OF NET SALES (Q2’24 TTM) 31% LIGHTING & FIXTURES CABINETRY APPLIANCES ROOFING WALLS & FRAMING FLOORING WIRING & ELECTRICAL PLUMBING INTERIOR FINISHES KITCHEN & BATH 14
$2,849 $4,616 $4,580 $5,153 $6,243 $6,372 $6,427 2018 2019 2020 2021 2022 2023 Q2'24 TTM POWERSPORTSMARINE HOUSINGRV MARKETS $555 $721 $756 $1,008 $1,272 $1,060 $1,103 2018 2019 2020 2021 2022 2023 Q2'24 TTM HOUSING NET SALES ($ in millions) END MARKET NET SALES DRIVERS MH shipments improved 19% y/y in the second quarter and are up 17% YTD1, which when combined with share gains contributed to consistent net sales growth New and innovative products helping to drive share gains MARKET TRENDS • Demand for affordable housing remains strong; conversion is limited by the high-interest rate environment and limited available inventory • Technological advancements in construction are improving the quality and efficiency of manufactured homes +13% CAGR 2018-Q2’24 TTM TTM MH CONTENT PER UNIT1 +16% CAGR 2018-Q2’24 TTM Continued Strong Demand for Affordable Housing, Tempered by Higher Interest Rates 1 Company estimates based on data published by the Manufactured Housing Institute (MHI) as of the Company’s reported Q2’2024 earnings on 08/01/2024 15
Trusted Partner and Supplier of Choice Strategic Priorities 16 Support our brands’ organic growth while remaining poised and ready to execute on strategic opportunities across the Outdoor Enthusiast and Housing markets CONTINUE STRATEGIC DIVERSIFICATION Maintain strong balance sheet and robust cash flow generation bolstering ability to navigate economic challenges and pursue profitable growth opportunities MAINTAIN SOLID FINANCIAL FOUNDATION Leverage cross-selling synergies, utilize innovation playbook, and optimize core competencies ADVANCE ORGANIC GROWTH
Credit Highlights
Key Credit Highlights Track Record of Growth Driven by PATK’s Entrepreneurial Spirit Well-Positioned for Long-Term, Stable Growth Highlighted by Continued Diversification Nimble Platform Allows for Successful Navigation Through Economic Cycles Deep and Highly Experienced Leadership Team Robust Free Cash Flow Generation Across Cycles Prudent Capital Allocation and Conservative Balance Sheet Management Favorable Demographic Trends 1 2 3 4 5 6 7 18
$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q2'24 TTM RV Housing Marine Powersports $21 $37 $52 $71 $105 $138 $200 $280 $250 $329 $531 $674 $431 $492 Track Record of Growth Driven by PATK’s Entrepreneurial Spirit $308 $437 $595 $736 $920 $1,222 $1,636 $2,263 $2,337 $2,487 $4,078 $4,882 $3,468 $3,597 PF Adj. EBITDA1 Net Sales ($ in millions) 19 1 1 Non-GAAP metric, see appendix for reconciliation to closest GAAP metric.
$165 $128 $187 $332 $350 $348 63% $0 $0 $0 $1 $1 $1 $1 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 2019 2020 2021 2022 2023 Q2'24 TTM Free Cash Flow Avg. Free Cash Flow Conversion $ in millions Robust Free Cash Flow Generation Across Cycles 2 FY’21 - ’22 Significant Free Cash Flow1 During Periods of High Demand 63% Avg. Free Cash Flow1 Conversion2 2018 – 2023 $348M Q2’24 TTM Free Cash Flow1 FY’23 Continued Free Cash Flow1 From Decrease in Net Working Capital 1 20 1 Free Cash Flow is a non-GAAP metric, see appendix for reconciliation to closest GAAP metric | 2 Free Cash Flow/PF Adj. EBITDA 2
Prudent Capital Allocation and… $93 $384 $650 $439 $146 $437 2019 2020 2021 2022 2023 Q2'24 TTM Acquisitions Capital Expenditures Share Buybacks Dividends Cash Flow Priorities Invest in Cash Flow Accretive Projects Automation and Investments in IT to Manage Costs Historic Use of Cash ($ in millions) 3 21 Maintenance Capital Expenditures are typically $25 - $30 Million Annually, With Acquisitions, other Capital Expenditures, and Share Buybacks Done on a Discretionary Basis
Favorable Demographic Trends Target Demographic (US 35-44) Continues to Grow 2 HOUSING RV MARINE OUTDOOR ENTHUSIAST Of current RV owners are between ages 18-341 22% Of Millennial and Gen Z RV owners plan to buy another RV of which 78% prefer to buy a new model1 84% Of realtors reported that properties sold in less than one month5 65% Of current households in America are camping households3 69% Of boat owners who bought boats during the pandemic plan to upgrade 4 49% Recently passed to improve the outdoor enthusiast experience and conserve national parks and public lands THE EXPLORE ACT Po p u la ti o n ( in t h o u sa n d s) 30,000 32,000 34,000 36,000 38,000 40,000 42,000 44,000 46,000 48,000 50,000 4 22 1 RV Industry Association/SSI/Company Estimates | 2 U.S. Census Bureau | 3 The 2023 North American Camping & Outdoor Hospitality Report sponsored by Kampgrounds of America, Inc. (data as of 2022) | 4 Boat Trader Survey 2023 | 5 June 2024 NAR Realtor Confidence Index Average age of RV buyers, down from 41 pre-pandemic1 32
o High variable cost model o Flexible manufacturing process o Can adjust output quickly based on capacities and demand o Non-capital-intensive businesses o Flexible working capital Nimble Platform Allows for Successful Navigation Through Economic Cycles Flexible, high variable cost business model 1 Leadership team with deep industry experience 2 Disciplined cost management with continued focus on optimizing fixed costs 3 Strong balance sheet4 Key Messages ✓ Voluntary wage reductions at Executive Level ✓ Wage reductions for salaried team members ✓ Furlough of members that were impacted by suspension of operations ✓ RIF actions ✓ Stopped all non-essential hiring ✓ Prioritized critical maintenance capital expenditures ✓ Aggressive reduction of working capital o Further wage reductions o Facility consolidations o Divestiture of facilities / brands o Staggered lease terms o Sale leasebacks Playbook Flexible Business Model Cost Containment Actions Taken Additional Levers Available 5 23
Well-Positioned For Long-Term Stable Growth… These growth initiatives have resulted in Patrick becoming a leading component solutions provider in the Outdoor Enthusiast and Housing markets STRATEGIC ACQUISITIONS INNOVATION STRATEGIC GEOGRAPHIC POSITION Pursue accretive acquisition opportunities to further strengthen primary markets and explore potential adjacent markets New product development and product line extensions to further enhance Patrick’s extensive proprietary product offerings Grow geographic footprint near OEMs and customers to enhance responsiveness to customer needs and improving logistics efficiencies INDUSTRY GROWTH MARKET LEADER CUSTOMER RELATIONSHIPS Positioned to capitalize on long- term secular growth trends and favorable demographics in all end markets Developed leading market positions in key product categories across our four primary end markets Cross-pollinate sales across customers and market sectors in our Outdoor Enthusiast and Housing markets 6 24
$ in millions FY 2019 Q2’24 TTM Δ Wholesale RV Shipments 406,070 326,940 (19)% Total Net Sales $2,337 $3,597 +54% Total RV Sales $1,287 $1,624 +26% Total Marine Sales* $329 $631 +92% Total Housing Sales $721 $1,103 +53% Total Powersports Sales - $239 NM Gross Margin 18.1% 22.6% +450 bps Adjusted Operating Margin1 6.6% 7.7% +110 bps Free Cash Flow1 $165 $348 +111% Share/content growth of 7% Strategic acquisitions and diversification propelling net sales and margin expansion Strong cash flow generation and balance sheet Customer-focused innovation driving organic growth and market share gains Automation initiatives driving operational improvement Q2’24 Highlights: …Highlighted by Continued Diversification 6 25 1 Non-GAAP metric, see appendix for reconciliation to closest GAAP metric. *In 2019 Powersports sales were included in Marine Sales
Deep and Highly Experienced Management Team o Average management team industry experience of ~25 years, spanning multiple economic cycles o Senior leadership team managed the Company through the last recession and have subsequently transformed the Company o Given deep industry experience, the management team knows which levers to pull as economic conditions change o Proven ability to manage at scale with approximately 10,000 employees across 23 states Andy Nemeth Chairman & CEO Jeff Rodino President - RV Kip Ellis President – Powersports, Technology, & Housing Richard Reyenger President - Marine Andy Roeder EVP – Finance, CFO, & Treasurer Hugo Gonzalez EVP – Operations & COO Stacey Amundson EVP & Chief HR Officer Joel Duthie EVP, Chief Legal Officer & Secretary Matt Filer SVP – Finance & Chief Accounting Officer Charlie Roeder EVP – Sales & Chief Sales Officer 7 26
Financial Overview
Historical Financial Overview $27 $32 $65 $80 $59 $55 2019 2020 2021 2022 2023 Q2'24 TTM $2,337 $2,487 $4,078 $4,882 $3,468 $3,597 2019 2020 2021 2022 2023 Q2'24 TTM $250 $329 $531 $674 $431 $492 10.7% 13.2% 13.0% 13.8% 12.4% 13.7% 2019 2020 2021 2022 2023 Q2'24 TTM PF Adj. EBITDA Margin Net Sales Pro Forma Adjusted EBITDA2 & Margin2 $165 $128 $187 $332 $350 $348 2019 2020 2021 2022 2023 Q2'24 TTM Capital Expenditures Free Cash Flow1 $ in millions $ in millions $ in millions $ in millions 28 1 Free Cash Flow is a non-GAAP metric, defined as Cash Flows from Operating Activities less Capital Expenditures, see appendix for reconciliation from GAAP metrics | 2 Non-GAAP metric, see appendix for reconciliation to closest GAAP metric.
Q&A
Appendix
Use of Non-GAAP Financial Information * As defined by credit agreement -Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Pro-Forma Adjusted EBITDA, EBITDA Margin, Free Cash Flow, Adjusted Operating Margin, Net Debt and Pro Forma Total Net Leverage are non-GAAP financial measures. In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non-GAAP operating results adjusted for certain items and other one-time items. - Net Debt is defined as total debt less cash and cash equivalents. Pro Forma Total Net Leverage is the ratio of Net Debt to Pro Forma Adjusted EBITDA. - Free Cash Flow Conversion is Free Cash Flow divided by Pro Forma Adjusted EBITDA. - We adjust for the items listed above in all periods presented, unless the impact is immaterial to our financial statements. - We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for comparison to budgeted operating results. We believe the adjusted results are useful to investors because they help them compare our results to previous periods and provide important insights into underlying trends in the business and how management oversees our business operations on a day-to-day basis. Non-GAAP Reconciliations 1 RECONCILIATION OF NET INCOME TO EBITDA TO PRO FORMA ADJUSTED EBITDA Fiscal Year Ended December 31, ($ in millions) 2018 2019 2020 2021 2022 2023 Q2’24 TTM Net Income $120 $90 $97 $225 $328 $143 $153 + Interest Expense, net 26 37 43 58 61 69 73 + Income Taxes 32 28 33 69 107 48 46 + Depreciation & Amortization 55 63 74 105 131 145 155 EBITDA $233 $218 $247 $457 $627 $405 $427 + Stock Compensation Expense 14 15 16 23 22 19 21 + Acquisition Pro Forma, transaction-related expenses & other 33 17 66 51 25 7 44 Pro Forma Adjusted EBITDA* $280 $250 $329 $531 $674 $431 $492 Net Sales $2,263 $2,337 $2,487 $4,078 $4,882 $3,468 $3,597 Pro Forma Adjusted EBITDA Margin 12.4% 10.7% 13.2% 13.0% 13.8% 12.4% 13.7% 1 May not sum due to rounding Fiscal Year Ended December 31, ($ in millions) 2018 2019 2020 2021 2022 2023 Q2’24 TTM Cash Flows from Operating Activities $200 $192 $160 $252 $412 $409 $403 Less: Capital Expenditures (34) (27) (32) (65) (80) (59) (55) Free Cash Flow $166 $165 $128 $187 $332 $350 $348 Pro Forma Adjusted EBITDA* $280 $250 $329 $531 $674 $431 $492 Free Cash Flow Conversion 59.3% 66.0% 38.9% 35.2% 49.3% 81.2% 70.7% CALCULATION OF FREE CASH FLOW Q2 ‘24 TTM 2019 Operating Income $272 $155 Net Sales $3,597 $2,337 Operating margin 7.6% 6.6% Acquisition related fair-value inventory step-up - - Transaction costs 0.1% - Adjusted operating margin 7.7% 6.6% RECONCILIATION OF ADJUSTED OPERATING MARGIN FOR THE TRAILING TWELVE MONTHS 31
