INVESTOR PRESENTATION September 2020
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 operations 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. Investor Presentation 2
COMPANY OVERVIEW & HIGHLIGHTS Investor Presentation
KEY MESSAGES Prioritization of team members safety, commitment to maintaining a 1 safe work environment while continuing to serve our customers Well-prepared for strong resurgence in our end markets as a result 2 of increased consumer demand Quick response to initial COVID-19 and flexible business model led 3 to strong operational and financial performance in the quarter Strong balance sheet and ample liquidity to support strategic growth 4 investments and disciplined capital allocation Positioned for Success Now and in the Future Investor Presentation 4
PATRICK INDUSTRIES AT A GLANCE (NASDAQ: PATK) Key Component Manufacturer and Supplier to RV, Marine, Manufactured Housing and Industrial Markets KEY FACTS SUSTAINABLE COMPETITIVE ADVANTAGES Founded 1959 Experienced management team with an average of 20+ years of industry experience Headquartered Elkhart, Indiana Leading market position in all product categories 1 Market-cap $1.2B Deep customer relationships with 30+ years for top customers, including key design partners Facilities ~170 Stable Free Cash Flow (FCF) generation Current States Presence 23 Favorable demographic trends supporting growth across multiple end markets Employees ~7,700 Diversified end market exposure with favorable secular trends Q2’20 LTM RESULTS LEADING AND DIVERSIFIED MARKET PLATFORM Revenue $2.1B Leisure & Lifestyle Housing & Industrial RV Marine MH Industrial Net Income $63MM Travel Trailer, Pontoon, Manufactured and Resid. Housing, Fifth Wheel, Fiberglass, Ski & Modular Housing, Comm’l Fixtures, Folding Trailer, Wake, Aluminum Modular Structure Institutional Operating Cash Flows $138MM Class A, B, C Furniture 1 Market-cap as of 9/10/2020 Manufacture and Distribute Quality Products that Exceed Customer Expectations Investor Presentation 5
STRATEGIC END MARKETS OVERVIEW Sales Composition ($MM) Lifestyle & Leisure Housing & Industrial RV Marine MH Industrial Net Sales (LTM as of 6/28/20) $1,128MM $285MM $424MM $292MM $2,337 $2,263 Areas of Expertise 12% $2,129 Lamination/Custom Components ✔ ✔ ✔ 13% 14% Hard/Softwoods Cabinetry ✔ ✔ ✔ 12% 19% Thermoforming/ Plastics ✔ ✔ ✔ ✔ $1,636 20% Countertops & Fabrication ✔ ✔ ✔ 11% 12% 14% Metal Fabrication / Fuel Tanks ✔ ✔ ✔ 13% 13% Electrical Systems & Wire Harnesses ✔ ✔ ✔ ✔ 7% Electronics & Appliances ✔ ✔ ✔ ✔ Full Body Paint ✔ 63% Wiring ✔ ✔ ✔ 55% 69% 53% Marine Canvas & Towers ✔ Fiberglass ✔ ✔ ✔ ✔ Distribution & Design Center ✔ ✔ ✔ 2017 2018 2019 LTM Geographic Reach & 6/28/20 Industry Concentration RV Marine MH Industrial Portfolio of products is highly leverageable across business lines Investor Presentation 6
LEADING MARKET POSITION IN ALL PRODUCT CATEGORIES Significant organic growth opportunities with current product categories in RV, Marine and MH markets; addressable industrial market is very large and fragmented, resulting in significant growth opportunities Recreational Vehicle Marine Primary Market: ~$4.0B | ~39% Market Share Primary Market: ~$1.9B | ~15% Market Share (Calculated on a TTM basis) (Powerboat Retail Unit – Calculated on a TTM Basis) $9,000 $8,000 $2,639 $3,135 $3,086 $1,682 $1,930 $2,101 $1,659 $1,394 $57 $119 $306 $850 2Q15 2Q16 2Q17 2Q18 2Q19 2Q20 Total 2Q15 2Q16 2Q17 2Q18 2Q19 2Q20 Total Potential Potential o 100% market share in our existing products would yield a total potential o 100% market share in our existing products would yield a total potential content/unit of $8,000 content/unit of $9,000 o 2% decline in TTM content per unit – Q2’20 vs. Q2’19 TTM o 16% decline in TTM content per unit – Q2’20 vs. Q2’19 TTM Manufactured Housing Industrial Primary Market: ~$1.05B | ~41% Market Share N/A (Calculated on a TTM basis) $11,000 Q2’20 Revenue - $70.6MM vs. $3,889 $4,501 $1,790 $1,827 $2,084 $2,520 Q2’19 Revenue - $72.4MM 2Q15 2Q16 2Q17 2Q18 2Q19 2Q20 Total Potential o 100% market share in our existing products would yield a total potential o 60% of Patrick’s industrial sales are linked to the residential housing market content/unit of $11,000 o Addressable market opportunities in residential (both single and multi-family), o 16% growth in TTM content per unit – Q2’20 vs. Q2’19 TTM commercial high rise, big box retail, office furniture and hospitality / schools Investor Presentation 7
CLEAR STRATEGIC PATH FORWARD FOR PROFITABLE GROWTH Pursue Execute Disciplined Focus on Exercise a Prudent Organic Growth Acquisition Strategy Geographic Expansion Financial Policy o Invest in internal growth o Leverage fragmentation in o Leverage existing product o Use strong cash flow to via cross-selling, product our core markets and capabilities, relationships, reduce debt and reload line extensions driven by achieve meaningful growth and expertise growth capacity brands, deep industry at a competitive price relationships, and using o Increase collaboration with o Long-term target leverage comprehensive design and o Diversify our end market regional manufacturers to ratio of ~2.00x – 2.25x innovation center exposure lower cost o When below target o Devote capital to strategic o Drive gross and operating leverage and ample FCF is infrastructure to drive margin expansion through available, return value to efficiency and capacity value-add products and shareholders through realization of input cost share repurchases on an o Identify and realize synergies opportunistic basis synergistic cost saving initiatives to increase FCF Investor Presentation 8
INCREASED FOCUS ON ESG RESPONSIBILITIES AND BEST PRACTICES Environmental o Established transportation / resource usage program to reduce costs, fuel consumption and emissions o Build leading safety culture with continuous improvement and training o Ongoing conservation efforts to reduce waste, recycle chemicals and increase energy efficiency Social o Assess product suppliers for environmental & social responsibility o Support numerous charitable organizations in local communities: ‒ Elkhart Community Foundation ‒ RV industry production associate skills training program ‒ Boys & Girls Clubs in Elkhart and neighboring towns o Recruit new college graduates for 3-year IMPACT Leadership Development Program Governance o Experienced and diverse board with an independent lead director; 67% independent members; 33% gender & ethnic diversity o Annual election of all directors o Single class voting structure o Code of Ethics and Business Conduct for all employees and directors Focused on ESG to Drive Long-term Shareholder Value Investor Presentation 9
OPERATIONS & SHORT-TERM OUTLOOK We remain disciplined with a flexible business model that enables us to shift production across like-product We remain disciplinedfacilities with and a flexible provides business additional levers model to remainthat allows efficient for the ability to shift production across like-product facilities and provides levers to pull as we continue to navigate through this dynamic macro environment SHORT-TERM OUTLOOK July/August sales and shipment trends indicate a resurgence in primary markets with strong demand across our customer base LEVERAGING OUR MODEL Highly variable cost model with demonstrated durability and resilience – flexible manufacturing processes and working capital INTERNAL ACTIONS Operational and financial foundation promotes adaptability – cost reduction, capacity flexibility, and synergistic opportunities executed and ongoing; majority of direct labor workforce returned to production in early May HEALTH & SAFETY Created and implemented protocol focused on team member safety – dedication to each other, our customers and our communities Q1 2020 – COVID-19 PANDEMIC BEGINS Navigating Successfully Through Dynamic Macro Environment Investor Presentation 10
FAVORABLE LONG-TERM DEMOGRAPHIC TRENDS Investor Presentation
STRONG, FAVORABLE DEMOGRAPHIC TRENDS ACROSS END MARKETS Lifestyle and Leisure Housing and Industrial o Participation in outdoor activities of U.S. population o U.S. adult population estimated to expand by 12MM has averaged 49% over the last five years between 2019 – 2024 o Improved consumer savings levels for discretionary o Gen Y (Millennials - age 18-39) is the largest group: spend items 98MM in 2019 (older Gen Y in peak home buying years) o Culture shift toward outdoor activities being embraced by all population segments and ethnicities o Growth in population of first-time home buyers and those looking to downsize o Shift in consumer behavior that aligns with social distancing guidelines, which are naturally embodied by o Record low housing inventory is driving up prices – the RV & boating lifestyles lack of high-quality, affordable homes o Continued low interest rate environment Sources: 2019 Outdoor Participation Report; RVIA; U.S. Census Bureau Investor Presentation 12
Specific Specific population is within familybuilding stages of lifecycle INCREASING InvestorPresentation Company, Euromonitor, Sources: RVIA & TheNews 36,000 38,000 40,000 42,000 44,000 46,000 48,000 50,000 1990 Key Population Demographic Supports Future Market Upside PotentialUpside Market FutureSupports Demographic KeyPopulation 1991 1992 1993 portion of disposable income to discretionary purchases and high 1994 POPULATION 1995 1996 1997 1998 Articles 1999 2000 2001 USPopulation: Ages35 2002 WITHIN WEALTHFORMING DEMOGRAPHIC 2003 2004 2005 2006 2007 2008 13 2009 2010 2011 – settling settling into permanent 2012 – 2013 44 2014 (000s) 2015 2016 2017 2018 2019 - 2020 ticket items 2021 2022 housing 2023 2024 2025 and allocating a 2026 2027 2028 2029 2030
END MARKET TRENDS Investor Presentation
DIVERSE END MARKETS WITH FAVORABLE SECULAR TRENDS RV End Market Overview o Despite further drawback, 2019 marked the fourth most historical units ever shipped o Shipments of wholesale units expected to be up low single-digits in 2020 reflecting very low dealer inventory and strong retail demand that offsets the market disruption related to COVID-19 experienced in the first half of 2020 U.S. Wholesale Unit Shipments (000s) RV End Market Performance $3,170 $3,086 Historical Average: 340 units $2,965 $2,234 $1,789 $2,039 $1,434 $1,128 $1,287 $1,128 505 $670 $880 484 431 406 2015 2016 2017 2018 2019 LTM 374 6/28/20 353 357 321 End Market Revenue ($MM) Content Per Unit 286 252 237 242 Market Growth 166 17% 13% 12% 11% 15% 4% 5% (4%) (16%) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E Shipment Units Average Industry Growth *2020E = Company Estimates Investor Presentation 15
DIVERSE END MARKETS WITH FAVORABLE SECULAR TRENDS Marine End Market Overview o 1M boats are expected to be retired in the next 3 – 4 years due to increasing average age of boats in service (estimate 25 years) o $10.5B in retail sales of new powerboats in 2018 U.S. Retail Unit Shipments (000s) Marine End Market Performance $600 $1,586 $2,000 $1,256 $1,394 Historical Average: 185 units $500 $1,500 $400 $538 $328 $1,000 267 $274 $285 $300 $111 $179 $500 $200 $112 $0 $100 $21 $36 ($500) 218 210 $0 ($1,000) 203 207 199 2015 2016 2017 2018 2019 LTM 172 182 6/28/20 158 154 153 End Market Revenue ($MM) Content Per Unit 139 143 Market Growth (Retail) 10% 9% 7% 6% 5% 4% 3% 3% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E (5%) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E Shipment Units Average Industry Growth *2020E = Company Estimates Investor Presentation 16
DIVERSE END MARKETS WITH FAVORABLE SECULAR TRENDS Manufactured Housing End Market Overview o Demand for new construction due to low housing supply and low mortgage rates o Pent up housing demand and improving credit combined with low inventory and affordability to drive continued growth o Shipments of wholesale units expected to increase low single digits for full year 2020 MH End Market Performance MH Wholesale Unit Shipments (000s) $600 $4,616 $4,501 $5,000 $4,500 $500 $2,849 $437 $424 $4,000 $2,289 $3,500 $400 $1,966 $275 Historical Average: 73 units $1,825 $3,000 $300 $159 $208 $2,500 $128 $2,000 $200 $1,500 $1,000 $100 $500 96 97 95 $0 $0 93 2015 2016 2017 2018 2019 LTM 82 81 6/28/20 71 End Market Revenue ($MM) Content Per Unit 60 64 55 50 50 52 Market Growth 15% 14% 10% 10% 6% 7% 3% 4% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E (2%) Shipment Units Average 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E Industry Growth *2020E = Company Estimates Investor Presentation 17
DIVERSE END MARKETS WITH FAVORABLE SECULAR TRENDS Industrial End Market Overview o Expanded portfolio of products, driven primarily through acquisitions, allows Patrick to capture more of forecasted market growth o Due to our array of capabilities and diversified geographic presence, we can shift capacity to fill market needs Seasonally Adjusted New Housing Starts (000s) Industrial End Market Performance Historical Average: 981 starts $280 $285 $292 $188 $147 $101 1,355 1,250 1,290 1,174 1,203 1,112 2015 2016 2017 2018 2019 LTM 1,003 6/28/20 906 925 781 End Market Revenue ($MM) 554 587 609 Market Growth 28% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 18% 11% 8% 6% 4% 4% 2% 3% Housing Starts Average 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E Industry Growth *2020E = Company Estimates Investor Presentation 18
FINANCIAL OVERVIEW Growth Initiatives and Capital Allocation Strategy Investor Presentation
STRONG TRAJECTORY OF SALES AND EARNINGS GROWTH Sales Growth ($MM) Earnings Growth $2,337 $200 $6.00 $2,263 +42% $2,129 $180 $4.93 +3% $5.00 +38% $160 (22%) +43% $1,636 $140 $3.85 $3.48 $120 $4.00 $120 +34% $1,222 +34% +40% $90 $100 $2.73 $3.00 $86 (25%) +42% $2.43 $920 +33% $80 $1.81 +54% $63 $56 $2.00 +25% $60 $42 +32% $40 +38% $1.00 $20 $- $- 2015 2016 2017 2018 2019 LTM 2015 2016 2017 2018 2019 LTM 6/28/20 6/28/20 Net Income ($MM) Diluted EPS o Sales continued to grow and outpace their respective markets, albeit at a slower pace in 2019, driven by acquisitions, new products and line extensions, and market share gains, and were offset in part by lower sales volumes in our end markets. Pre-COVID, Q1’20 sales were strong due to recalibrated RV dealer inventories and positive tailwinds from lower interest rates and low housing supply. Although early Q2’20 saw lost sales volume due to shutdowns, the quarter ended with a significant resurgence of consumer demand in our leisure lifestyle market. o Net income and EPS in 2019 reflected the impact of headwinds associated with each of our primary markets and were offset by cost reduction and strategic initiatives. Net income and EPS in Q2 YTD 2020 were negatively impacted by COVID-19, but cost actions taken in Q2’20 helped to partially mitigate this impact. Investor Presentation 20
Q2 2020 FINANCIAL RESULTS ($ MILLIONS EXCEPT PER SHARE DATA) OPERATING CASH FLOW FROM NET SALES DILUTED EPS INCOME & MARGIN OPERATIONS (30.8%) (73.2%) (97.4%) (58.0%) $93.8 $613.2 $45.2 $1.18 $424.0 $39.4 7.4% $12.1 2.9% $0.03 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 6M 2019 6M 2020 . Decline attributable to lost . Fixed cost reduction efforts in . Highly flexible cost structure . Q2 2020 earnings disruptions production days / business Q2 along with proactive cost combined with fixed cost related to COVID-19 impact on disruption related to COVID-19 containment measures in 2019 reductions helped to mitigate end markets throughout April and early May helped mitigate some impact significant headwinds related to . Strong focus on cash from COVID-19, and to an COVID-19 related shutdowns . Revenues from leisure lifestyle management to navigate even greater extent after market (RV & Marine) declined unique COVID environment production resumed 39%, with RV down 40% and marine down 34% . Revenues from housing & industrial markets decreased 12%, with MH down 18% and industrial down 2% Investor Presentation 21
TRACK RECORD OF STRONG CASH FLOW GENERATION Cash Flow from Free Cash Flow1 ($MM) Free Cash Flow per Share2 Operating Activities ($MM) $250 $8.00 $180 $166 $165 350% $7.08 $160 $7.00 $6.81 $200 $200 $192 300% $140 $132 $6.00 $5.72 $15 $120 $0.65 $153 250% $5.00 $150 $15 $117 $5.07 $100 200% $138 $4.00 $82 $3.57 $80 $77 $100 $3.14 $100 $97 150% $3.00 $59 $2.53 $60 $67 100% $2.00 $40 $50 84% 86% 89% 77% 50% $1.00 64% $20 $0 0% $0.00 $0 CF from Op. Activities % Conversion % Conversion is operating cash flow as a % of EBITDA 1 FCF is calculated as operating cash flow less capex 2 FCF divided by weighted average diluted shares outstanding $15 million of receivables collected two $15 million of receivables collected two $15 million of receivables collected two business days after quarter end business days after quarter end business days after quarter end Strong FCF Generation Provides Flexibility Across Strategic and Financial Objectives Investor Presentation 22
BALANCE SHEET, CASH FLOW AND LIQUIDITY The strength of our cash flows, combined with our liquidity continue to provide us with the flexibility to navigate a variety of scenarios through these unprecedented times DEBT STRUCTURE AND MATURITIES NET LEVERAGE1 ($ in millions) . $550MM Senior Secured Revolver, due September 2024 Total Debt Outstanding $702.5 . $100MM Term Loan ($96.3MM o/s at 6/28/20), pre-determined quarterly Less: Cash on Hand (125.6) installments; balance due @ maturity Net Debt $576.9 . $172.5MM 1% Convertible Senior Notes, due February 2023 LTM Adj. EBITDA $250.1 . $300MM 7.5% Senior Notes, October 2027 Net Debt to Adj. EBITDA 2.31x COVENANTS LIQUIDITY ($ in millions) . Consolidated Net Leverage Ratio – maximum 4.00x vs. 2.31x at 6/28/20 Total Revolver Credit Capacity $550.0 . Consolidated Fixed Charge Coverage Ratio – minimum 1.50x vs. 5.65x Less: Total Debt Outstanding (139.8) at 6/28/20 (including outstanding letters of credit) Unused Credit Capacity $410.2 LIQUIDITY Add: Cash on Hand 111.1 . Available liquidity, including cash on hand - $521.3MM at 6/28/20 Total Available Liquidity $521.3 1 As defined by credit agreement Investor Presentation 23
DISCIPLINED CAPITAL ALLOCATION STRATEGY Our capital allocation strategy is centered around the utilization of strong cash flows, a balanced disciplined leverage position, and capital resources to grow and reinvest in the business model Historical Capital Allocation ($MM) Future Priorities Opportunistic Acquisitions $93 $171 $160 $274 $485 $93 $62 o Strategic criteria 3% 8% 4% 15% 13% 10% 6% ‒ Strong management team 22% 25% 5% ‒ Aligns with our primary end markets 7% 7% 30% ‒ Expanded/enhanced customer relationships ‒ Expand geographic reach 19% ‒ Expands product offerings and manufacturing/distribution capabilities 92% 18% o Financial filters 87% 78% 82% ‒ Focused on accretive margins 71% ‒ ROIC > Cost of Capital within 1-2 years 60% ‒ EPS accretive in first full year 38% Capex o Continued critical investments to drive efficiencies and capacities where necessary 2014 2015 2016 2017 2018 2019 6M'20 Dividends Acquisitions Capex Dividends Stock Buybacks o Latest dividend declared for Q3’20 on 8/13/20 Stock Buybacks o Paused on repurchases in Q2’20 due to COVID-19; cautiously opportunistic re: future repurchase activity Investor Presentation 24
KEY INVESTMENT HIGHLIGHTS MARKET BUSINESS LEADERSHIP STRATEGIC LIQUIDITY POSITION MODEL Market leader in our Deep industry Flexible, high Disciplined cost Strong balance primary market experience and variable cost management sheet with no near- sectors; uniquely proven track record business model to balanced with term debt positioned for near- of successfully drive operational strategic growth maturities, ample and long-term shift navigating efficiency and investment liquidity and an toward outdoor economic cycles navigate through all opportunities enhanced capital activities economic structure conditions Driving Confidence in Financial Performance and Creating Long-term Shareholder Value Investor Presentation 25
APPENDIX Investor Presentation
END MARKET PRODUCT CATEGORIES RV PRODUCT CATEGORIES1 TOWABLE MOTORIZED Shipments: 89% Wholesale | 64% Retail Value Shipments: 11% Wholesale | 36% Retail Value Travel Trailer | ASP: $25,300 Fifth Wheel | ASP: $55,200 Class A | ASP: $214,000 Class B & C | ASP: $95,800 Total Retail Value of Shipments in 2019: $18B MARINE PRODUCT CATEGORIES2 Pontoon Ski & Wake Fiberglass Aluminum ASP: $39,200 | 28% of Market ASP: $104,300 | 5% of Market ASP: $75,500 | 36% of Market ASP: $22,700 | 31% of Market U.S. Expenditures On Boats, Engines and Accessories Totaled $42B in 2018 MANUFACTURED HOUSING PRODUCT CATEGORIES3 Single-Section Homes Multi-Section Homes ASP: $52,400 | 47% of Market ASP: $99,500 | 53% of Market 1 Source: RVIA 2019 Industry Profile (travel trailer ASP stat includes camping trailers and truck campers). 2 Source: NMMA 2018 Statistical Abstracts. 3 Source: MHI / IBTS. Investor Presentation 27
PATRICK PRODUCT LINES: RV EXTERIOR Front & Dash Panels Bow Trusses Exterior Speakers Rear Caps Additional Product Lines: o Softwoods o Full Body Paint o Aluminum Gauges o Steel Gauges o Mill Finish & Pre-painted Aluminum and Steel o Slit & Embossed Steel o FRP Coil & Sheet o Trim Panels o Fuel Systems RV Power RV Grills & Cords & Inlets Accessories Aluminum & FRP Side Walls Motion Sensing Fender Skirts Lights Laminated Side Walls LED Lighting Paint & Paint Mask Investor Presentation 28
PATRICK PRODUCT LINES: RV INTERIOR Closet & Passage Fiberglass Bath Fixtures Doors & Shower Doors Closet Hardware Lighting Microwaves Backsplashes Mattresses Laminated Panels Electronics Laminate & Vanity/Wall & Printed Vinyl Ceramic Flooring Mirrors Additional Supplied Products: Furniture o Exit Lighting Countertops o Ceiling Fans Cooktops o Power Cords & Inlets o RV Tank Heater Pads o Fire Extinguishers o Electric Fireplaces o Wiring, Electrical & Plumbing Products o Inverters o Tire Pressure Monitors o Electrical Switches, Receptacles, & Outlets Drawer Fronts & Sides o RV Transfer Switches Cabinet Hardware o Battery Selector Switches o Cut-to-Size, Boring, Foiling & Edge- Under Cabinet Lighting Banding o Flooring Adhesive Tile o Instrument Panel Dinettes, Tables & Chairs o Made-to-Order Laminated Products including Vinyl, Paper, Veneers & High- Window Trim Pressure Laminates (HPL) o Trim Products Slide Trim – Foam, Hardwood, Wrapped Hardwood Speakers Accessories Investor Presentation 29
PATRICK PRODUCT LINES: MARINE Wire Harnesses Electronics Wire Screens Aluminum Fuel & Marine Growth: Holding Tanks o Wind Shields (Glass) o Plastic Fuel & Holding Tanks o Fuel System Related Components Ladder Helms o Plastic Seat Bases & Components Dash Assemblies o Vinyls (Biminis, Covers) o Fabricated & Extruded Aluminum Boat Covers, Tops, o Electronics Decking, Flooring, Carpet, Vinyls Towers & Frames o Gauges, Instrument Panels, Displays o Lighting o Steering & Throttle Controls Dash Assemblies o Plastic Products: Boxes, Inlay Tables Wire Harnesses o Canvas Products, Panels & Trim Boat Hull Design & Tooling Aluminum Fuel & Holding Tanks Investor Presentation 30
PATRICK PRODUCT LINES: MANUFACTURED HOUSING Kitchen & Bath Fiberglass Bath Fixtures & Shower Faucets & Sinks Doors & Enclosures Gypsum (Drywall & Drywall Wrapped Profile Moldings Plumbing Products Finishing Products) Siding Trusses Ceiling Fans Interior & Exterior Decorative Lighting Fixtures Interior Passage Shingles Doors Backsplashes Additional Supplied Products: o Building Arches o Closet Organization Products o Adhesives & Sealants o Innovative Lighting o Electrical Components (e.g., Panels/ Breakers, Outlet Boxes & Switches/ Receptacles) o Fireplaces and Surrounds o Made-to-Order Laminated Products Medicine including Vinyl, Paper, Veneers & High- Cabinets Pressure Laminates (HPL) o Cut-to-Size, Boring, Foiling & Edge- Banding o Solid Surface, Granite and Quartz Fab o Flooring Adhesive o Tables & Signs o Roof Trusses o Wardrobe Doors & Hardware Systems Electronics o Closet Organizers & Shelving Printed o Air Handling Products Vinyl o Carpeting Tile Recessed Lighting Countertops Fluorescent Lighting Laminate & Ceramic Flooring o Ventilation System & Ridge Cap Wiring/Electrical Under Cabinet o Felt Paper Lighting Products Cabinet Doors & o Ice & Water Protection Components o Microwaves Drip Edge o Flashing o Roofing Membrane Investor Presentation 31 o Soffit & Fascia
NON-GAAP RECONCILIATIONS Reconciliation of Cash Flow from Operations to Free Cash Flow ($ in millions) 2015 2016 2017 2018 2019 LTM 6/28/20 Cash Flow from Operations $ 67 $ 97 $ 100 $ 200 $ 192 $ 138 Less: Capital Expenditures (8) (15) (22) (34) (28) (21) Free Cash Flow $ 59 $ 82 $ 77 $ 166 $ 165 $ 117 Reconciliation of Net Income to EBITDA ($ in millions) 2015 2016 2017 2018 2019 Net income $ 42 $ 56 $ 86 $ 120 $ 90 Add: Depreciation & amortization 17 24 33 55 63 Interest expense, net 4 7 9 26 37 Income taxes 24 28 27 32 28 EBITDA $ 87 $ 115 $ 155 $ 233 $ 217 Reconciliation of % Conversion (Cash Flow as % of EBITDA) ($ in millions) 2015 2016 2017 2018 2019 Cash Flow from Operations $ 67 $ 97 $ 100 $ 200 $ 192 EBITDA $ 87 $ 115 $ 155 $ 233 $ 217 % Conversion 77% 84% 64% 86% 89% Reconciliation of Free Cash Flow Per Share ($ / # shares in millions except per share data) 2015 2016 2017 2018 2019 LTM 6/28/20 Free Cash Flow $ 59 $ 82 $ 77 $ 166 $ 165 $ 117 Divided by: Weighted Average Diluted Shares Outstanding 23.3 22.9 24.6 24.3 23.3 23.1 Free Cash Flow Per Share $ 2.53 $ 3.57 $ 3.14 $ 6.81 $ 7.08 $ 5.07 Use of Non-GAAP Financial Information Free Cash Flow, Earnings before interest, taxes, depreciation and amortization (“EBITDA”), % Conversion, and Free Cash Flow Per Share 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. Investor Presentation 32
NON-GAAP RECONCILIATIONS Reconciliation of Net Income to EBITDA to LTM Adjusted EBITDA ($ in millons) LTM 6/28/20 Net income $ 63.2 + Depreciation & amortization 67.2 + Interest expense, net 40.3 + Income taxes 21.3 EBITDA 192.0 + Stock compensation expense 13.6 + Acquisition proforma, transaction-related expenses & other 44.5 LTM Adjusted EBITDA $ 250.1 Reconciliation of Net Leverage* ($ millions) Total debt outstanding @ 6/28/20 $ 703.7 Less: term loan payment (1.2) Total debt outstanding @ 6/30/20 702.5 Less: cash on hand @ 6/30/20 (125.6) Net debt @ 6/30/20 $ 576.9 LTM Adjusted EBITDA $ 250.1 Net Debt to Adjusted EBITDA 2.31 X *As defined by credit agreement which includes debt balance and cash balance two days following quarter end Use of Non-GAAP Financial Information Earnings before interest, taxes, depreciation and amortization (“EBITDA”), LTM 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. Investor Presentation 33