Patrick Industries, Inc.
(Nasdaq: PATK)
This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with
respect to financial condition, results
of operations, business strategies, operating efficiencies or synergies, competitive position, growth
opportunities for existing products, plans and objectives of management, markets for the common stock of Patrick Industries, Inc. and other
matters. Statements in this presentation that are not historical facts are forward-looking statements for the purpose of the safe harbor provided
by Section 21E of the Exchange Act and Section 27A of the Securities Act. Forward-looking statements,
including, without limitation, those
relating to our future business prospects, revenues and income, wherever they occur in this presentation, are necessarily estimates reflecting the
best judgment of our senior management at the time such statements
were made, and involve a number of risks and uncertainties that could
cause actual results to differ materially from those suggested by forward-looking statements. Patrick Industries, Inc. does not undertake to
update forward-looking statements to reflect
circumstances or events that occur after the date the forward-looking statements are made. You
should consider forward-looking statements, therefore, in light of various important factors, including those set forth in the reports and documents
that
Patrick Industries, Inc. files with the Securities and Exchange Commission, including Patrick Industries Inc.s Annual Report on Form 10-K
for the year ended December 31, 2005. There are a number of factors, many of which are beyond control
of Patrick Industries, Inc., which could
cause actual results and events to differ materially from those described in the forward-looking statements. These factors include pricing
pressures due to competition, costs and availability of raw materials,
availability of retail and wholesale financing for manufactured homes,
availability and costs of labor, inventory levels of retailers and manufacturers, levels of repossessed manufactured homes, the financial condition
of our customers, interest rates,
oil and gasoline prices, the outcome of litigation, volume of orders related to hurricane damage and operating
margins on such business, and adverse weather conditions impacting retail sales. In addition,
national and regional economic conditions and
consumer confidence may affect the retail sale of recreational vehicles and manufactured homes..
Disclaimer
About Patrick Industries
A leading manufacturer and
distributor of building and component
products for the following markets:
Manufactured Housing (MH)
Recreational Vehicle (RV)
Industrial Markets: kitchen cabinet,
home and office furniture, marine,
fixture/commercial furnishings
Supply virtually all major RV and MH
OEMs
Increasing penetration into industrial
markets
History
1959 Company founded by Mervin Lung as a distributor to the MH
industry
1961 Date of Incorporation
1968 Company taken public
1968 Acquires Mobilcraft Door and Midwest lamination
1972 Starts first Panel lamination division
1980 Acquires ILC Products Aluminum extrusion division
1986 Paul Hassler leads Company into industrial market in CA
1989 David Lung named President
2003 David Lung retires
2004 Paul Hassler elected President & CEO
National Reach
Based in Elkhart, Ind., Patrick Industries
operates through 12 distribution centers
and 15 manufacturing facilities located in
13 states.
Patrick distribution centers.
Patrick manufacturing divisions.
Manufactured Products
Manufactured Products:
Make-to-order laminated products
using the latest in lamination
technology, including vinyl, paper,
veneers and high pressure
laminates (HPL)
Cut to Size, boring, foiling &
Edgebanding
Wrapped profile moldings
Custom-made extruded aluminum
products
Manufactured drawer sides and
bottoms
Pre-finished cabinet doors
Adhesives
Manufacturing Divisions:
Patrick Lamination
Patrick Metals
Nickell Enterprises
Patrick Door
Patrick Moulding
Sun Adhesives
Distributed Products
Pre-finished wall and ceiling
panels
Drywall and drywall finishing
products
Particleboard
Vinyl and cement siding
Interior passage doors
Resilient flooring
Decorative Tile
Hardwood flooring
Shelving and closet systems
Floor sealer
Sheet stock high pressure
laminates (HPL)
Decorative wood veneers and
wood products
Roofing products
Close-off material
Insulation
Decorative mirrors and glass
Bottom board
Wood glue and hot melt glue
Interior paint
Transition to New Management
& Ownership
Patrick founded by Mervin Lung in 1959; IPO in 1968
New management team formed in 2004
Mervin Lung, largest shareholder, retires and sells total
interest (27.5%) to Tontine Capital Partners in 2005
New management team implementing new strategic growth
plan 2005-2006
New Strategic Plan
Increased market penetration
Enhanced capacity utilization
Improving operating efficiencies
New marketing and product development
Strategic, accretive acquisition opportunities to further drive
growth and shareholder value.
New Products
Exclusive supplier of Lamitech high pressure laminates
Supplier of Beauflor resilient flooring product; introducing a
cutting edge European technology which provides superior
quality helping to reduce warranty costs for manufactured
homes
New powder paint facility for aluminum extrusions opening in
early 2007; Will be one of only three in North America with
these capabilities
Almost $2.0 million in top-line growth from new products year-
to-date in 2006
Business Segments
Manufactured Products produced
at 11 manufacturing facilities across
the U.S.
Distributed Products from 12
distribution centers across the U.S.
Engineered Solutions including
aluminum extrusion and fabrication
operations.
Other Manufactured products,
including adhesives, cabinet doors
and a machine manufacturing
division.
Major Customers
MH market:
Clayton/Oakwood (a
division of Berkshire
Hathaway)
Champion (NYSE: CHB)
Fleetwood (NYSE: FLE)
Palm Harbor Homes
(Nasdaq: PHHM)
Skyline (NYSE: SKY)
Industrial market:
Saco Industries (private)
Commercial Wood (private)
Hitachi (NYSE: HIT)
Kitchen Kompact (private)
Stack-a-Shelf (a division of
Emerson)
Zee Manufacturing (private)
RV market:
Fleetwood (NYSE: FLE)
Forest River (a division of
Berkshire Hathaway)
Monaco Coach (NYSE: MNC)
Skyline (NYSE: SKY)
Thor (NYSE: THO)
Patricks Content per MH*
*Based on Patrick industry sales divided by gross industry unit sales
** 2006 Forecast
Patricks Content per RV*
*Based on Patrick industry sales divided by gross industry unit sales
** 2006 Forecast
Third Quarter 2006 Results
Net sales of $90.8 million, 12% increase compared to last years 3Q
EPS of $0.08 per share compared with $0.03 per share in 3Q 2005
Increased sales led to increased profitability, as management continues
to keep fixed costs comparable from period to period
Operating income increased 66% compared to 3Q 2005
3Q 2006 included approximately $500,000 of incremental acquisition
costs related to the Companys investigation of strategic growth
opportunities
EPS of $0.50 for 9 months exceeded EPS of $0.30 for whole of 2005
Financial Results
Revenue
(in millions of dollars)
EPS
Acquisition Strategy
Immediate accretion
High-quality/due-diligence emphasis
Maximum 5x - 6x multiple
Experienced, quality-driven management team
Strategic fit with existing businesses
Diversification
Strong market position
Quality customer relationships
Investment Highlights
Platform established for future growth
New experienced management team and strategic plan
Introducing new products
Solid balance sheet and low leverage position
Growing market share and increasing sales volume to leverage operating efficiencies
across fixed overhead
Aggressively exploring strategic, accretive acquisition opportunities
Improving financial results despite difficult MH market
Diversification into industrial markets beyond RV and MH
New investor relations strategy to expand awareness of story
For More Information
Company Contact:
Andy L. Nemeth, CFO
Patrick Industries, Inc.
574-294-7511 / nemetha@patrickind.com
Website: www.patrickind.com
Investor Relations Contact:
Ryan McGrath, Jeff Lambert
Lambert, Edwards & Associates, Inc.
616-233-0500 / mail@lambert-edwards.com