Patrick Industries Inc 8-K, filed Feb 10, 2022
Patrick Industries Inc (PATK)
8-K
2022-02-10
For: 2022-02-10
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Added on
April 10, 2026
About this 8-K
Patrick Industries Inc filed this 8-K on February 10, 2022.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
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 2.02. Results of Operations and Financial Condition.
On February 10, 2022, the Company issued a press release announcing operating results for the fourth quarter and full year ended December 31, 2021. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
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) Slides for Earnings Presentation as contained in Exhibit 99.2
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit 99.1 - Press Release issued February 10, 2022
Exhibit 99.2 - Slides for Earnings 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: February 10, 2022 | By: | /s/ James E. Rose | ||||||
| James E. Rose | ||||||||
| Principal Accounting Officer | ||||||||
News ReleasePatrick Industries, Inc. Reports Record Fourth Quarter and Full Year 2021 Financial Results
Fourth Quarter 2021 Highlights (compared to Fourth Quarter 2020 unless otherwise noted)
•Net sales of $1.1 billion increased 49%
•Operating income of $95 million increased 52%
•Operating margin of 8.3% increased 30 basis points
•Net income of $61 million increased 61%
•Diluted earnings per share of $2.62 increased 60%
•Operating cash flows of $105 million increased 121%
•Acquisitions of Williamsburg and Wet Sounds
Full Year 2021 Highlights (compared to Full Year 2020 unless otherwise noted)
•Net sales of $4.1 billion increased 64%
•Operating income of $352 million increased 103%
•Operating margin of 8.6% increased 160 basis points
•Net income of $225 million increased 132%
•Diluted earnings per share of $9.63 increased 129%
•Operating cash flows of $252 million increased 57%
•Completed 10 acquisitions
ELKHART, IN - February 10, 2022 - Patrick Industries, Inc. (NASDAQ: PATK), a leading component solutions provider for the RV, marine, manufactured housing ("MH") and industrial markets, today reported record financial results for the fourth quarter and full year ended December 31, 2021.
Net sales in the fourth quarter of 2021 increased $375 million, or 49%, to $1.1 billion from $773 million in the fourth quarter of 2020. Strong performance in both our leisure lifestyle and housing markets drove results in the fourth quarter of 2021.
Operating income of $95 million increased $33 million, or 52%, from $62 million in the fourth quarter of 2020. Operating margin of 8.3% in the fourth quarter of 2021 increased 30 basis points compared to 8.0% in the same period a year ago.
Net income was $61 million, an increase of 61%, compared to $38 million in the fourth quarter of 2020. Diluted earnings per share was $2.62, an increase of 60% for the fourth quarter of 2021 compared to $1.64 for the fourth quarter of 2020. Diluted earnings per share for the fourth quarter of 2021 reflects the benefit of state and other income tax items of $0.07 per share.
"We are pleased with our overall performance during the fourth quarter and full year and extremely grateful for the efforts of our entire team, particularly given the supply chain challenges and labor constraints impacting businesses throughout the country," said Andy Nemeth, Chief Executive Officer. “In partnership with our customers, our team members worked tirelessly to leverage our flexible operating model against the backdrop of strong demand and production levels in our leisure lifestyle and housing markets. The investments we have been making over the past eighteen months, both strategically and in operating infrastructure, are resulting in positive contributions and will continue to enhance our ability to meet and exceed our customers' needs.”
Jeff Rodino, President, said, "Market conditions across our platform have remained strong, with positive inventory recalibration starting to occur in the RV industry and strong backlogs in our marine, MH, and industrial markets. Demographic trends point toward long-term growth with new buyers continuing to enter our markets. Our growth has been supported by ongoing implementation of best practice solutions, continuous improvement initiatives and investments in automation and capacity expansion which continue to drive our results."
Fourth Quarter 2021 Revenue by Market Sector (compared to Fourth Quarter 2020 unless otherwise noted)
RV (59% of Revenue)
•Revenue of $674 million increased 51% while wholesale RV industry unit shipments increased 13%
•Full year content per wholesale RV unit increased 24% to $4,006
Marine (16% of Revenue)
•Revenue of $189 million increased 75% while wholesale powerboat industry unit shipments increased 1%
•Full year content per wholesale powerboat unit increased 76% to $3,632
MH (13% of Revenue)
•Revenue of $151 million increased 24% while wholesale MH industry unit shipments increased 7%
•Full year content per wholesale MH unit increased 13% to $5,153
Industrial (12% of Revenue)
•Revenue of $134 million increased 39% while housing starts increased 5%
Full Year 2021 Results
Net sales of $4.1 billion for the full year 2021 increased $1.6 billion, or 64%, from $2.5 billion in 2020, primarily reflecting a significant increase in demand in our leisure lifestyle and housing markets as well as contributions from acquisitions completed during 2021. As previously disclosed, net sales for 2020 reflect the impact of COVID-19 related production shutdowns during the second quarter of 2020.
Full year 2021 operating income of $352 million increased $179 million, or 103%, compared to $173 million in 2020. Operating margin of 8.6% improved 160 basis points from 7.0% in the prior year. Net income of $225 million increased 132% compared to $97 million in 2020. Diluted earnings per share of $9.63 increased 129% compared to $4.20 in the prior year.
Balance Sheet, Cash Flow and Capital Allocation
Operating cash flow for the fourth quarter of 2021 was $105 million, an increase of 121%, compared to $47 million for the fourth quarter of 2020. Full year 2021 operating cash flow of $252 million increased 57% compared to the prior year due to strong profitability and growth across all end markets. Business acquisitions for the fourth quarter of 2021 totaled $210 million, including the previously announced acquisitions of Wet Sounds, Inc., a designer, fabricator, engineer, and distributor of innovative audio systems and accessories to marine OEMs and consumers and Williamsburg Furniture and Williamsburg Marine, manufacturers of seating for the motorized RV and marine end markets. For the full year 2021, business acquisitions in RV, marine and industrial markets totaled $520 million. Capital expenditures for the fourth quarter of 2021 totaled $21 million, an increase of 108%, compared to $10 million in the fourth quarter of 2020. Capital expenditures for full year
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2021 totaled $65 million, an increase of 102% from 2020, reflecting continued investments in automation and capacity in support of scalable growth.
In alignment with our capital allocation strategy, we returned $25 million to shareholders in the fourth quarter of 2021, consisting of $17 million in opportunistic repurchases of 223,396 shares and $8 million of dividends. For the full year 2021, we repurchased 612,325 shares for a total of $49 million and returned $27 million in dividends to our shareholders.
Our net debt at the end of the quarter was approximately $1.4 billion, resulting in a net leverage ratio of 2.3x (as calculated in accordance with our credit agreement). Available liquidity, comprised of borrowing availability under our credit facility and cash on hand, was approximately $532 million.
Business Outlook and Summary
"The strength and tailwinds in our markets coupled with the focus and dedication of our team and great partnerships with our customers resulted in record results in 2021," said Mr. Nemeth. "Additionally, through continued strategic diversification and the patient and disciplined execution of our capital allocation strategy, we are continuing to position our platform to drive results and scalability into 2022 and many years beyond. Our marine business almost doubled year over year through both strategic and organic growth, and represented 16% of our 2021 consolidated revenue, up from 14% in 2020. Our continued focus on growing our marine presence, in combination with both the strength of the solid foundation in our RV businesses and long runway we see in our housing and industrial markets, will continue to help propel our business model going forward, complemented by our focus on efficiency and production of highly engineered products and proprietary solutions. We improved our overall margin profile in 2021 and we believe we will have the opportunity to drive further margin improvement in 2022. We expect OEM production in our end markets to remain strong in 2022, and we also expect to continue to use our strong cash flows to invest in automation, strategic information technology solutions, human capital, innovation, and philanthropic efforts to support our customers, team members, and communities as well as our growth and diversification strategy."
Conference Call Webcast
As previously announced, Patrick Industries will host an online webcast of its fourth quarter 2021 earnings conference call that can be accessed on the Company’s website, www.patrickind.com, under “For Investors,” on Thursday, February 10, 2022 at 10:00 a.m. Eastern time. In addition, a supplemental earnings presentation can be accessed on the Company’s website, www.patrickind.com under “For Investors.”
About Patrick Industries, Inc.
Patrick Industries (NASDAQ: PATK) is a leading component solutions provider for the RV, marine, manufactured housing and various industrial markets – including single and multi-family housing, hospitality, institutional and commercial markets. Founded in 1959, Patrick is based in Elkhart, Indiana, with over 11,000 employees across the United States.
Use of Financial Metrics
In addition to reporting financial results in accordance with U.S. GAAP, the Company also provides financial metrics, such as net leverage ratio, content per unit, net debt and available liquidity, which we believe are important measures of the Company's business performance. These metrics should not be considered alternatives to U.S. GAAP. Our computations of net leverage ratio, content per unit, net debt and available liquidity may differ from similarly titled measures used by others. We calculate net debt by subtracting cash and cash equivalents from the gross value of debt outstanding. RV wholesale unit shipments are provided by the RV Industry Association. Marine wholesale unit shipments are provided by the National Marine Manufacturers Association. MH wholesale unit shipments are provided by the Manufactured Housing Institute. Housing starts are provided by the U.S. Census Bureau. You should not consider these metrics in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP.
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Cautionary Statement Regarding Forward-Looking Statements
This press release 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 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. Potential factors that could impact results include: the impact of the continuing financial and operational uncertainty due to the COVID-19 pandemic, including its impact on the overall economy, our sales, customers, operations, team members, suppliers, and the countries where we have operations or from which we source products and raw materials, such as China; adverse economic and business conditions, including cyclicality and seasonality in the industries we sell our products; inflationary pressures; the deterioration of the financial condition of our customers or suppliers; the ability to adjust our production schedules up or down quickly in response to rapid changes in demand; the loss of a significant customer; changes in consumer preferences; pricing pressures due to competition; conditions in the credit market limiting the ability of consumers and wholesale customers to obtain retail and wholesale financing for RVs, manufactured homes, and marine products; the imposition of restrictions and taxes on imports of raw materials and components used in our products; information technology performance and security; any increased cost or limited availability of certain raw materials; the impact of governmental and environmental regulations, and our inability to comply with them; our level of indebtedness; the ability to remain in compliance with our credit agreement covenants; the availability and costs of labor and production facilities and the impact of labor shortages; inventory levels of retailers and manufacturers; the ability to generate cash flow or obtain financing to fund growth; future growth rates in the Company's core businesses; realization and impact of efficiency improvements and cost reductions; the successful integration of acquisitions and other growth initiatives; increases in interest rates and oil and gasoline prices; the ability to retain key executive and management personnel; the disruption of business resulting from natural disasters or other unforeseen events, and adverse weather conditions impacting retail sales.
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. Information about certain risks that could affect our business and cause actual results to differ from those expressed 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, 2020, 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.
Contact:
Julie Ann Kotowski
Investor Relations
kotowskj@patrickind.com
574.294.7511
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| PATRICK INDUSTRIES, INC. | |||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | |||||||||||||||||||||||
| Fourth Quarter Ended | Year Ended | ||||||||||||||||||||||
| (thousands except per share data) | December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | |||||||||||||||||||
| NET SALES | $ | 1,147,479 | $ | 772,613 | $ | 4,078,092 | $ | 2,486,597 | |||||||||||||||
| Cost of goods sold | 920,455 | 630,295 | 3,276,898 | 2,027,580 | |||||||||||||||||||
| GROSS PROFIT | 227,024 | 142,318 | 801,194 | 459,017 | |||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||
| Warehouse and delivery | 38,993 | 28,196 | 139,606 | 98,400 | |||||||||||||||||||
| Selling, general and administrative | 77,705 | 40,695 | 253,547 | 146,376 | |||||||||||||||||||
| Amortization of intangible assets | 15,634 | 11,268 | 56,329 | 40,868 | |||||||||||||||||||
| Total operating expenses | 132,332 | 80,159 | 449,482 | 285,644 | |||||||||||||||||||
| OPERATING INCOME | 94,692 | 62,159 | 351,712 | 173,373 | |||||||||||||||||||
| Interest expense, net | 16,695 | 11,181 | 57,890 | 43,001 | |||||||||||||||||||
| Income before income taxes | 77,997 | 50,978 | 293,822 | 130,372 | |||||||||||||||||||
| Income taxes | 16,977 | 13,154 | 68,907 | 33,311 | |||||||||||||||||||
| NET INCOME | $ | 61,020 | $ | 37,824 | $ | 224,915 | $ | 97,061 | |||||||||||||||
| BASIC NET INCOME PER COMMON SHARE | $ | 2.69 | $ | 1.68 | $ | 9.87 | $ | 4.27 | |||||||||||||||
| DILUTED NET INCOME PER COMMON SHARE | $ | 2.62 | $ | 1.64 | $ | 9.63 | $ | 4.20 | |||||||||||||||
| Weighted average shares outstanding - Basic | 22,653 | 22,576 | 22,780 | 22,730 | |||||||||||||||||||
| Weighted average shares outstanding - Diluted | 23,299 | 23,083 | 23,355 | 23,087 | |||||||||||||||||||
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| PATRICK INDUSTRIES, INC. | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) | |||||||||||
| As of | |||||||||||
| (thousands) | December 31, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 122,849 | $ | 44,767 | |||||||
| Trade receivables, net | 172,392 | 132,505 | |||||||||
| Inventories | 614,356 | 312,809 | |||||||||
| Prepaid expenses and other | 64,478 | 37,982 | |||||||||
| Total current assets | 974,075 | 528,063 | |||||||||
| Property, plant and equipment, net | 319,493 | 251,493 | |||||||||
| Operating lease right-of-use assets | 158,183 | 117,816 | |||||||||
| Goodwill and intangible assets, net | 1,191,833 | 852,076 | |||||||||
| Other non-current assets | 7,147 | 3,987 | |||||||||
| TOTAL ASSETS | $ | 2,650,731 | $ | 1,753,435 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Current maturities of long-term debt | $ | 7,500 | $ | 7,500 | |||||||
| Current operating lease liabilities | 40,301 | 30,901 | |||||||||
| Accounts payable | 203,537 | 105,786 | |||||||||
| Accrued liabilities | 181,439 | 83,202 | |||||||||
| Total current liabilities | 432,777 | 227,389 | |||||||||
| Long-term debt, less current maturities, net | 1,278,989 | 810,907 | |||||||||
| Long-term operating lease liabilities | 120,161 | 88,175 | |||||||||
| Deferred tax liabilities, net | 36,453 | 39,516 | |||||||||
| Other long-term liabilities | 14,794 | 28,007 | |||||||||
| TOTAL LIABILITIES | 1,883,174 | 1,193,994 | |||||||||
| SHAREHOLDERS’ EQUITY | |||||||||||
| Common stock | 196,383 | 180,892 | |||||||||
| Additional paid-in-capital | 59,668 | 24,387 | |||||||||
| Accumulated other comprehensive loss | (2,228) | (6,052) | |||||||||
| Retained earnings | 513,734 | 360,214 | |||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 767,557 | 559,441 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 2,650,731 | $ | 1,753,435 | |||||||
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PATRICK INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Year Ended | |||||||||||
| (thousands) | December 31, | December 31, | |||||||||
| 2021 | 2020 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 224,915 | $ | 97,061 | |||||||
| Depreciation and amortization | 104,808 | 73,270 | |||||||||
| Amortization of convertible notes debt discount | 7,987 | 7,187 | |||||||||
| Stock-based compensation expense | 22,887 | 15,960 | |||||||||
| Other adjustments to reconcile net income to net cash provided by operating activities | 1,611 | 12,082 | |||||||||
| Change in operating assets and liabilities, net of acquisitions of businesses | (110,078) | (45,407) | |||||||||
| Net cash provided by operating activities | 252,130 | 160,153 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (64,804) | (32,100) | |||||||||
| Business acquisitions and other investing activities | (509,930) | (305,784) | |||||||||
| Net cash used in investing activities | (574,734) | (337,884) | |||||||||
| NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 400,686 | 83,108 | |||||||||
| Increase (decrease) in cash and cash equivalents | 78,082 | (94,623) | |||||||||
| Cash and cash equivalents at beginning of year | 44,767 | 139,390 | |||||||||
| Cash and cash equivalents at end of year | $ | 122,849 | $ | 44,767 | |||||||
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p 4th Quarter 2021 Earnings Presentation
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 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, but are not limited to, the impact of the continuing financial and operational uncertainty due to the COVID-19 pandemic, including its impact on the overall economy, our sales, customers, operations, team members and suppliers. 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. 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. All references to profit measures and earnings per share on a comparable basis exclude items that affect comparability. 2Q4 2021 Earnings Presentation
VALUE PROPOSITION Experienced management team with an average of 27+ years of industry experience Leading market position in major product categories Deep customer relationships with 30+ years for top customers, including key design partners Strong Free Cash Flow (FCF) generation & FCF conversion Favorable demographic trends supporting growth across multiple end markets Diversified end market exposure with favorable secular trends PATRICK INDUSTRIES AT A GLANCE (NASDAQ: PATK) MANUFACTURE AND DISTRIBUTE QUALITY PRODUCTS THAT AIM TO EXCEED CUSTOMER EXPECTATIONS Key Component Manufacturer and Supplier to RV, Marine, Manufactured Housing and Industrial Markets KEY FACTS Headquartered Elkhart, Indiana Market-cap1 $1.6B Acquisitions Since 2010 63 Current States Presence 23 Employees ~11,000 Q4 2021 RESULTS Revenue $1.1B Net Income $61M Diluted EPS $2.62 Operating Cash Flows $105M 1 As of 02/04/2022 Leisure Lifestyle Housing & Industrial RV Marine MH Industrial Travel Trailer, Fifth Wheel, Folding Trailer, Class A, B, C Pontoon, Fiberglass, Ski & Wake, Aluminum Manufactured and Modular Housing, Modular Structure Resid. Housing, Comm’l Fixtures, Institutional Furniture 59% 16% 13% 12% LEADING AND DIVERSIFIED MARKET PLATFORM 3 % Net Sales (Q4 2021) Q4 2021 Earnings Presentation
1 Growth in Total Revenue of +49% Y/Y • RV / Marine driven by outdoor recreation trends, strong execution of nimble platform against continued lean dealer inventory and need for channel inventory replenishment • Industrial and MH driven by housing demand, low interest rates and shift from urban to suburban 2 Operating Margin Expansion of +30bps Y/Y • Efficient and flexible platform that leverages fixed costs • Automation and technology initiatives to help alleviate persisting commodity and labor pressures • Strong execution and partnership with customers 3 Continued Strategic Diversification of Marine and Aftermarket Presence + Increased Capex • Acquisitions of Wet Sounds, driving consumer connectivity in marine, powersports and home audio; and Williamsburg, enhancing marine and RV solutions • Increases in Capex to expand capacity, efficiency and automation 4 Continued Progress on ESG Initiatives • Ensuring well-being, health and safety of team members • Human Capital Management: Investments to attract, develop and retain top talent • Waste minimization and environmental initiatives Q4 2021 - QUARTERLY HIGHLIGHTS 4 STRONG EXECUTION AS REVENUE TRENDS CONTINUE Q4 2021 Earnings Presentation
$62 $95 Q4 2020 Q4 2021 $773 $1,147 Q4 2020 Q4 2021 NET SALES OPERATING INCOME & MARGIN DILUTED EPS CASH FLOW FROM OPERATIONS Q4 2021 FINANCIAL PERFORMANCE ($ millions except per share data) 5 8.0% 8.3% • 49% increase in Net Sales driven by increased demand in each of our four end markets • Gross margin improved through leveraging fixed costs through our team's operations and efficiencies in production • Operational performance supported by proactive securement of inventory for OEMs • Invested $21 million in capital expenditures to support automation, information technology and production and capacity initiatives $1.64 $2.62 Q4 2020 Q4 2021 $47 $105 Q4 2020 Q4 2021 Q4 2021 Earnings Presentation
• Content per Unit – increased 24% to $4,006 ($ millions ) MARINE INDUSTRIAL PERFORMANCE BY MARKET SECTORS Leisure Lifestyle1 Housing and Industrial1 MH • Content per Unit – increased 76% to $3,632 • Content growth driven by market share gains, aftermarket growth and acquisitions • Content per Unit – increased 13% to $5,153 • New Housing Starts in Q4 increased 5% • 70% of revenues tied to new housing starts; our products go into new homes 4-6 months after new housing starts 1 All metrics compared to 4th Quarter 2020 unless otherwise noted 59% of Q4’21 Sales 6 RV +51% $447 $674 Q4 2020 Q4 2021 +75% $108 $189 Q4 2020 Q4 2021 +24% $122 $151 Q4 2020 Q4 2021 +39% $96 $134 Q4 2020 Q4 2021 16% of Q4’21 Sales 13% of Q4’21 Sales 12% of Q4’21 Sales Q4 2021 Earnings Presentation
Industry Trends • Long term demographic shift of RV owners • Dealer inventories at a healthier state compared to year end 2020 against record OEM backlogs • Traditional seasonal winter retail demand trends • Dealers preparing for primary selling months in 2022 • New buyer traffic and activity remain strong • Dealer inventories at low levels with retail units outpacing wholesale units • Durable OEM production level against record backlogs • Production expected to accelerate into end of 2023 • Demographic trends continue to support strong demand patterns for quality, affordable homes • Record OEM backlogs • Demand from big box retail continues as homeowners continue to spend on home upgrades and DIY projects • Limited inventory and low interest rates fueling demand for residential construction • Growth in multi-family housing starts Durable Secular Trends • Lifestyle changes of families looking to experience campgrounds and boating activities with friends and family continues to fuel demand • Urban-to-less-dense movement demand • Demographics, lower inventories and price points • Urban to suburban and rural relocation and vacation home demand • Low inventories and low interest rates MARKET SECTOR TRENDS 7 Retail Trends 2021 TTM 1 Company estimates supported by RVIA & NMMA RV1 MARINE1 MH INDUSTRIAL RV: Slight restocking to move to healthier dealer inventories MARINE: Retail channel depletion continues 600,200 564,400 Wholesale Retail 138,400 214,200 Wholesale Retail Q4 2021 Earnings Presentation 83 2
BALANCE SHEET, CASH FLOW AND LIQUIDITY 1 As of 12/31/21; 2 As defined by credit agreement DEBT STRUCTURE AND MATURITIES1 • $150M Term Loan ($144M o/s), pre-determined quarterly installments; balance due April 2026 • $550M ($135M o/s) Senior Secured Revolver, due April 2026 • $172.5M 1.00% Convertible Senior Notes, due February 2023 • $300M 7.50% Senior Notes, due October 2027 • $259M 1.75% Convertible Senior Notes, due December 2028 • $350M 4.75% Senior Notes, due April 2029 LIQUIDITY1 • Available liquidity, including cash on hand - $532.4M STRONG BALANCE SHEET TO SUPPORT INVESTMENTS AND PURSUE ATTRACTIVE GROWTH OPPORTUNITIES 8Q4 2021 Earnings Presentation NET LEVERAGE2 ($ millions) Total Debt Outstanding $ 1,360.6 Less: Cash on Hand1 (122.8) Net Debt $ 1,237.8 LTM Adj. EBITDA $ 530.8 Net Debt to Adj. EBITDA 2.3x LIQUIDITY ($ millions) Total Revolver Credit Capacity $ 550.0 Less: Total Revolver Used (including outstanding letters of credit) (140.4) Unused Credit Capacity $ 409.6 Add: Cash on Hand 122.8 Total Available Liquidity $ 532.4 COVENANTS AND RATIOS1 • Consolidated Net Leverage Ratio – 2.3x • Consolidated Secured Net Leverage Ratio – 0.29x versus 2.75x maximum • Consolidated Fixed Charge Coverage Ratio – 5.83x vs. minimum 1.50x
STRATEGIC ACQUISITIONS Execute on strategic acquisitions in primary markets INNOVATION New product development and product line extensions INDUSTRY GROWTH BUSINESS MODEL Flexible, high variable cost business model to drive operational efficiency and navigate through all economic conditions MARKET POSITION COMPELLING INVESTMENT THESIS CREATING LONG‐TERM SHAREHOLDER VALUE 9 Market leader in our primary product lines; Market presence propels us to cross-pollinate sales across customers and end markets Long-term secular growth across all end markets & favorable demographics Q4 2021 Earnings Presentation
Appendix
($ in millions) LTM 12/31/2021 Net Income $ 224.9 +Depreciation & Amortization 104.8 + Interest Expense, net 57.9 + Income Taxes 68.9 EBITDA $ 456.5 + Stock Compensation Expense 22.9 + Acquisition proforma, transaction-related expenses & other 51.4 Adjusted EBITDA $ 530.8 NON-GAAP RECONCILIATIONS Use of Non-GAAP Financial Information * As defined by credit agreement which includes debt and cash balances -Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, and Net Debt to Adjusted EBITDA 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. -We adjust for the items listed above in all periods presented, unless the impact is clearly 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. RECONCILIATION OF NET INCOME TO EBITDA TO LTM ADJUSTED EBITDA RECONCILIATION OF NET LEVERAGE* 11 ($ in millions) Total debt outstanding @ 12/31/2021 $ 1,360.6 Less: cash on hand @ 12/31/2021 (122.8) Net debt @ 12/31/2021 $ 1,237.8 Adjusted EBITDA $ 530.8 Net debt to Adjusted EBITDA 2.3x Q4 2021 Earnings Presentation
