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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

                                                            

FORM 8-K


CURRENT REPORT
Pursuant To Section 13 OR 15(d) Of The Securities Exchange Act Of 1934

Date of report (Date of earliest event reported)
October 27, 2022
PATRICK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Indiana 000-03922 35-1057796
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification Number)

107 W. Franklin Street, P.O. Box 638 Elkhart, Indiana 46515
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, including area code (574) 294-7511
(Former name or former address if changed since last report)

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):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
 Common Stock, no par value  PATK NASDAQ

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 October 27, 2022, the Company issued a press release announcing operating results for the third quarter ended September 25, 2022. 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 October 27, 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: October 27, 2022   By: /s/ Jacob R. Petkovich
Jacob R. Petkovich
Executive Vice President - Finance, Chief Financial Officer, and Treasurer


EX-99.1 2 patk2022-q3991.htm EX-99.1 Document

imagea.jpg News Release

Patrick Industries, Inc. Reports Third Quarter 2022 Financial Results
Third Quarter 2022 Highlights (compared to Third Quarter 2021 unless otherwise noted)
•Net sales of $1.11 billion increased 5%, reflecting growth in our marine and housing markets, partially offset by a 40% reduction in RV OEM shipments
•Gross profit of $236 million increased 14%
•Gross margin of 21.3% increased 170 basis points
•Operating income of $93 million
•Operating margin of 8.3% decreased 50 basis points
•Net income of $59 million increased 2%
•Diluted earnings per share of $2.43 includes a reduction for the impact of the accounting treatment for convertible notes of $0.20 per share
•Operating cash flows of $156 million increased 126%
•Returned $14 million to shareholders in the quarter, including $7 million through common stock purchases

ELKHART, IN - October 27, 2022 - Patrick Industries, Inc. (NASDAQ: PATK), a leading component solutions provider for the Leisure Lifestyle and Housing markets today reported financial results for the third quarter ended September 25, 2022.

Net sales in the third quarter of 2022 increased $52 million, or 5%, to $1.11 billion from $1.06 billion in the third quarter of 2021, demonstrating the benefit of our strategic end market diversification initiatives. The strength in our marine and housing end markets, market share gains, and the contribution of acquisitions completed in 2021 and 2022 more than offset a $110 million decline in RV revenues in the quarter resulting from the planned reduction of production by our RV OEM customers.

Operating income remained stable at $93 million compared to the third quarter of 2021, and the operating margin of 8.3% in the third quarter of 2022 decreased 50 basis points compared to 8.8% in the same period a year ago. The decline in margin was driven principally by fixed cost absorption related to reduced RV OEM production of approximately 40% in the quarter, increased infrastructure investments to support our growth and strategic diversification efforts, continued execution of our IT transformation initiatives, and an increase in amortization of intangible assets from recent acquisitions, partially offset by the continued realization of efficiencies related to automation initiatives.

Net income increased 2% to $59 million, from $57 million in the third quarter of 2021. Diluted earnings per share of $2.43 decreased 1% compared to $2.45 for the third quarter of 2021. Third quarter 2022 diluted earnings per share includes a reduction of $0.20 for the accounting treatment of convertible notes discussed below.

In the first quarter of 2022, the Company adopted a new accounting standard that requires its 1.00% convertible notes due 2023 to be presented on an "if converted" basis in the calculation of diluted earnings per share. As a result of the adoption of this standard, the Company's third quarter 2022 diluted earnings per share was reduced by $0.20. Prior year results do not reflect the adoption of the new accounting standard. The Company does not intend to issue shares in settlement of the 1.00% convertible notes due 2023 that may be converted by their holders.

"We are pleased with our third quarter performance which reflects the resilience of our business and margin profile as a result of our end market diversification and the diligence of our team as we worked with each of our customers in very dynamic market conditions to meet evolving consumer demand," said Andy Nemeth, Chief Executive Officer.



"We remain focused on ensuring that our business is scalable to enable us to stay nimble, and our strong balance sheet positions us well to flex our business model and capitalize upon opportunities for additional growth and strategic diversification."

Jeff Rodino, President, said, "Our team continues to effectively and efficiently manage our business as we navigate the current reduction of production levels in our RV end market while supporting the growth in our marine and housing end market revenues. Our RV customers' thoughtful discipline in managing production is helping maintain healthy dealer inventory levels and continues to position the industry well to manage through a range of potential market conditions."

Third Quarter 2022 Revenue by Market Sector (compared to Third Quarter 2021 unless otherwise noted)
RV (47% of Revenue)
•Revenue of $524 million decreased 17% while wholesale RV industry unit shipments decreased 40%
•Content per wholesale RV unit (on a trailing twelve-month basis) increased 36% to $5,071

Marine (24% of Revenue)
•Revenue of $271 million increased 57% while estimated wholesale powerboat industry unit shipments increased 5%
•Estimated content per wholesale powerboat unit (on a trailing twelve-month basis) increased 60% to $5,109

Manufactured Housing ("MH") (16% of Revenue)
•Revenue of $175 million increased 30% while estimated wholesale MH industry unit shipments increased 10%
•Estimated content per wholesale MH unit (on a trailing twelve-month basis) increased 21% to $6,023

Industrial (13% of Revenue)
•Revenue of $142 million increased 19% while industry housing starts decreased 7%

Balance Sheet, Cash Flow and Capital Allocation

Cash provided by operations for the third quarter of 2022 of $156 million increased 126% compared to $69 million in the third quarter of 2021, reflecting continued profitability in our end markets and monetization of our working capital. Capital expenditures totaled $19 million in the third quarter of 2022, reflecting continued investments in infrastructure, software, and automation initiatives to better align resources for increased scalability, flexibility and efficiency. Net repayments on our revolving credit facility totaled $140 million in the third quarter of 2022.
In alignment with our capital allocation strategy, we returned approximately $14 million to shareholders in the third quarter of 2022, including $7 million through opportunistic repurchases of approximately 154,400 shares and $7 million of dividends.
Our total debt at the end of the third quarter was approximately $1.36 billion, resulting in a total net leverage ratio of 1.8x (as calculated in accordance with our credit agreement). Available net liquidity, comprised of borrowing availability under our credit facility and cash on hand, was approximately $485 million which is net of a $202.5 million temporary reserve against our $775 million revolving credit facility availability until the settlement of our 1.00% convertible notes due February 2023.
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Business Outlook and Summary
"In the third quarter of 2022, our team did an outstanding job of flexing our production capabilities and managing our variable costs in response to a 40% reduction in RV OEM shipments," continued Mr. Nemeth. "The marine and housing markets, which represent 53% of our total revenues, continued to perform well and have runway for channel fill with lower than optimum dealer and field inventory levels despite macro-economic headwinds. We believe our ongoing efforts to grow and diversify our end markets will continue to bear fruit and position the Company to manage effectively through periods of volatility. Our capital investment in automation and innovation will aid our ability to grow market share while also helping to drive a resilient margin profile. The $225 million increase in our revolving credit facility capacity during the third quarter of 2022, our balanced capital structure, and improving cash flow provide a solid liquidity foundation and support our goal of delivering long-term value for our shareholders, team members, customers, partners, and communities."
Conference Call Webcast
As previously announced, Patrick Industries will host an online webcast of its third quarter 2022 earnings conference call that can be accessed on the Company’s website, www.patrickind.com, under “For Investors,” on Thursday, October 27, 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 12,000 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.
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.
3


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; the effects of external economic factors, including adverse developments in world financial markets, disruptions related to tariffs and other trade issues, and global supply chain interruptions, including as a result of the current war in Ukraine; adverse economic and business conditions, including cyclicality and seasonality in the industries we sell our products; the effects of interest rate changes and other monetary and market fluctuations; 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 to include our ability to deter cyber attacks or other information security incidents; 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 manage working capital to include inventory and inventory obsolescence; 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, 2021, 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:
Steve O'Hara
Vice President of Investor Relations
oharas@patrickind.com
574.294.7511
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PATRICK INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Third Quarter Ended Nine Months Ended
(thousands except per share data) September 25, 2022 September 26, 2021 September 25, 2022 September 26, 2021
NET SALES $ 1,112,089  $ 1,060,177  $ 3,929,957  $ 2,930,613 
Cost of goods sold 875,638  852,016  3,071,057  2,356,443 
           GROSS PROFIT 236,451  208,161  858,900  574,170 
 Operating Expenses:
     Warehouse and delivery 39,997  35,885  125,213  100,613 
     Selling, general and administrative 84,924  64,245  250,969  175,842 
     Amortization of intangible assets 18,769  14,758  54,175  40,695 
           Total operating expenses 143,690  114,888  430,357  317,150 
OPERATING INCOME 92,761  93,273  428,543  257,020 
     Interest expense, net 15,302  15,436  44,990  41,195 
 Income before income taxes 77,459  77,837  383,553  215,825 
     Income taxes 18,640  20,440  95,537  51,930 
NET INCOME $ 58,819  $ 57,397  $ 288,016  $ 163,895 
BASIC NET INCOME PER COMMON SHARE $ 2.66  $ 2.52  $ 12.93  $ 7.18 
DILUTED NET INCOME PER COMMON SHARE $ 2.43  $ 2.45  $ 11.78  $ 7.01 
Weighted average shares outstanding - Basic 22,087  22,789  22,274  22,826 
Weighted average shares outstanding - Diluted 24,413  23,403  24,573  23,375 








5


PATRICK INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
As of
(thousands) September 25, 2022 December 31, 2021
ASSETS
Current Assets
     Cash and cash equivalents $ 53,269  $ 122,849 
     Trade receivables, net 285,734  172,392 
     Inventories 733,970  614,356 
     Prepaid expenses and other 34,448  64,478 
           Total current assets 1,107,421  974,075 
 Property, plant and equipment, net 343,262  319,493 
 Operating lease right-of-use assets 164,725  158,183 
 Goodwill and intangible assets, net 1,273,065  1,191,833 
 Other non-current assets 8,177  7,147 
          TOTAL ASSETS $ 2,896,650  $ 2,650,731 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
     Current maturities of long-term debt $ 7,500  $ 7,500 
     Current operating lease liabilities 43,352  40,301 
     Accounts payable 188,691  203,537 
     Accrued liabilities 196,361  181,439 
         Total current liabilities 435,904  432,777 
 Long-term debt, less current maturities, net 1,333,455  1,278,989 
 Long-term operating lease liabilities 124,289  120,161 
 Deferred tax liabilities, net 42,812  36,453 
 Other long-term liabilities 13,514  14,794 
          TOTAL LIABILITIES 1,949,974  1,883,174 
          TOTAL SHAREHOLDERS’ EQUITY 946,676  767,557 
          TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 2,896,650  $ 2,650,731 


6


PATRICK INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
(thousands)
  September 25, 2022 September 26, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 288,016  $ 163,895 
Depreciation and amortization 96,256  76,298 
Stock-based compensation expense 15,596  17,307 
Amortization of convertible notes debt discount 1,399  5,528 
Other adjustments to reconcile net income to net cash provided by operating activities (664) 8,184 
Change in operating assets and liabilities, net of acquisitions of businesses (170,795) (123,795)
Net cash provided by operating activities 229,808  147,417 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (63,437) (44,155)
  Business acquisitions and other investing activities (145,447) (299,561)
Net cash used in investing activities (208,884) (343,716)
NET CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES (90,504) 196,414 
(Decrease) increase in cash and cash equivalents (69,580) 115 
Cash and cash equivalents at beginning of year 122,849  44,767 
Cash and cash equivalents at end of period $ 53,269  $ 44,882 

7



PATRICK INDUSTRIES, INC.
Net Income Per Common Share

The table below illustrates the calculation for diluted share count which shows the dilutive impact of the adoption of ASU 2020-06 on our 1.00% convertible notes due 2023 as mentioned above:

  Third Quarter Ended Nine Months Ended
(thousands except per share data) September 25, 2022 September 26, 2021 September 25, 2022 September 26, 2021
Numerator:
Net income for basic per share calculation $ 58,819  $ 57,397  $ 288,016  $ 163,895 
Effect of interest on potentially dilutive convertible notes, net of tax 478  —  1,417  — 
Net income for dilutive per share calculation $ 59,297  $ 57,397  $ 289,433  $ 163,895 
Denominator:
Weighted average common shares outstanding - basic 22,087 22,789 22,274 22,826
Weighted average impact of potentially dilutive convertible notes 2,064 2,053
Weighted average impact of potentially dilutive securities 262 614 246 549
Weighted average common shares outstanding - diluted 24,413 23,403 24,573 23,375
Net income per common share:
Basic net income per common share $ 2.66  $ 2.52  $ 12.93  $ 7.18 
Diluted net income per common share $ 2.43  $ 2.45  $ 11.78  $ 7.01 
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EX-99.2 3 patkq322earningspresenta.htm EX-99.2 patkq322earningspresenta
Q3 2022 Earnings Presentation 1 Q3 2022 Earnings Presentation October 27, 2022


 
Q3 2022 Earnings Presentation 2 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.


 
Q3 2022 Earnings Presentation 3 Q3 2022 Quarterly Highlights Strong Portfolio Performance and Execution by Team Members Growth in Total Revenue of +5% Y/Y • RV / Marine driven by outdoor recreation trends. Strong execution of nimble platform as RV production reduction offset by growth in our Marine & Housing markets • RV channel inventory has achieved balance, while marine channel continues to rebuild • Industrial and MH driven by housing demand, shift to multi-family and continued R&R spending • Efficient and flexible platform with highly variable cost structure; growing portfolio of higher margin products • Automation and technology initiatives help mitigate commodity and labor pressures • Strong execution, leverageable platform, strategic acquisitions and close partnership with customers Increased Cash Flows and Access to Capital Resources • 126% increase in cash flow from operations partially driven by working capital monetization • Deploying Capex to invest in increased automation, improve efficiency, and expand capacity where appropriate • Increased available liquidity, including expansion of credit facility, allows us to remain opportunistic as attractive growth opportunities appear • Returned capital to shareholders through share repurchases and continued dividends 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 recycling & upcycling initiatives • Publication of first sustainability report targeted for year-end 2022 Gross Margin Expansion of +170bps Y/Y Increased Cash Flows and Access to Capital Resources Continued Progress on ESG Initiatives


 
Q3 2022 Earnings Presentation 4 Performance by Market Sectors RV Marine MH Industrial 47% of Q3’22 Sales 24% of Q3’22 Sales 16% of Q3’22 Sales 13% of Q3’22 Sales (17%) +57% +30% +19% Revenue of $524M Revenue of $271M Revenue of $175M Revenue of $142M CPU1 of $5,071 +36% CPU1 of $5,109 +60% CPU1 of $6,023 +21% Housing Starts (Y/Y) (7%) CPU1 = Content per wholesale unit on a trailing twelve-month basis Multi-Family Single-Family (18%)+19%


 
Q3 2022 Earnings Presentation 5 Market Sector Trends Industry Trends • OEM shutdowns and reduced production schedules improve the health of inventory channel balance • Continued favorable demographic trends in the RV space, with additional government resources allocated to promoting parks improvements • Dealers continue to cite low inventory in higher-end categories • Supply chain issues easing • Freight costs declining • Demographic trends continue to support positive demand patterns for quality, affordable homes • OEMs continue to work through backlogs • Limited housing inventory sustains long-term demand trends • Rising interest rates slowing new housing starts, though signs of demand shift to multi-family and rental options Durable Secular Trends • Lifestyle preferences of families looking to experience camping/outdoor and boating activities with friends and family continues to support demand • Urban-to-less-dense movement • Demographics, lower inventories and price points • R&R activities, multi-family construction activity • Low inventory of available homes Unit Trends Q3 2022 RV1 MARINE1 MH INDUSTRIAL RV: Retail outpacing wholesale led by disciplined OEM production MARINE: Retail channel depletion continues 1 Company estimates supported by RVIA, NMMA & SSI 91,800 118,700 Wholesale Retail 46,500 47,800 Wholesale Retail


 
Q3 2022 Earnings Presentation 6 NET SALES & GROSS MARGIN OPERATING INCOME & MARGIN $2.45 $2.63 Q3 2021 Q3 2022 $2.45 $2.43 Q3 2021 Q3 2022 Q3 2022 Financial Performance $93 $93 Q3 2021 Q3 2022 $1,060 $1,112 Q3 2021 Q3 2022 8.8% 8.3%  5% increase in Net Sales driven by increased demand in our Marine, MH and Industrial end markets, partially offset by the reduction in RV OEM production  Gross margin improved through continued realization of production efficiency initiatives and proactive management of our highly variable cost structure  Operating margin results driven by the impact of reduced RV OEM production, investments in human capital, continued execution of our IT transformation and an increase in amortization of intangible assets  Invested $19M in capital expenditures to support automation, information technology and production efficiency initiatives  Adjusted diluted EPS for Q3 2022 increased 7% excluding the impact of new accounting standard on diluted EPS of $0.20, reflecting our growth in profitability and our opportunistic share repurchase activity ($ millions except per share data) DILUTED EPS ADJUSTED DILUTED EPS 19.6% 21.3%


 
Q3 2022 Earnings Presentation 7 Balance Sheet and Liquidity 1 As of 9/25/22; 2 As defined by credit agreement Strong Balance Sheet and Favorable Capital Structure to Support Investments and Pursue Attractive Growth Opportunities DEBT STRUCTURE AND MATURITIES1 • $150.0M Term Loan ($140.6M o/s), pre-determined quarterly installments; balance due August 2027 • $775.0M ($135.0M o/s) Senior Secured Revolver, due August 2027 • $172.5M 1.00% Convertible Senior Notes, due February 2023 • $300.0M 7.50% Senior Notes, due October 2027 • $258.8M 1.75% Convertible Senior Notes, due December 2028 • $350.0M 4.75% Senior Notes, due May 2029 LIQUIDITY1 • Available liquidity, including cash on hand - $485.3M NET LEVERAGE2 ($ millions) Total Debt Outstanding $ 1,356.9 Less: Cash and Debt Paid as Defined by the Credit Agreement (84.8) Net Debt $ 1,272.1 LTM Adj. EBITDA $ 701.3 Net Debt to Adj. EBITDA 1.8x LIQUIDITY ($ millions) Total Revolver Credit Capacity $ 775.0 Less: Total Revolver Used (including outstanding letters of credit) (140.5) Unused Credit Capacity $ 634.5 Add: Cash on Hand 53.3 Total Liquidity $ 687.8 Less: Reserve for 1.00% Convertible Senior Notes, due February 20232 (202.5) Total Available Liquidity $ 485.3 COVENANTS AND RATIOS1 • Consolidated Net Leverage Ratio – 1.8x • Consolidated Secured Net Leverage Ratio – 0.27x versus 2.75x maximum • Consolidated Fixed Charge Coverage Ratio – 6.19x vs. minimum 1.50x


 
Q3 2022 Earnings Presentation 8 Appendix


 
Q3 2022 Earnings Presentation 9 Non-GAAP Reconciliation RECONCILIATION OF NET INCOME TO EBITDA TO LTM ADJUSTED EBITDA ($ in millions) LTM 9/25/2022 Net Income $ 349.0 + Depreciation & Amortization 124.8 + Interest Expense, net 61.7 + Income Taxes 112.5 EBITDA $ 648.0 + Stock Compensation Expense 21.2 + Acquisition proforma, transaction-related expenses & other 32.1 Adjusted EBITDA $ 701.3 RECONCILIATION OF NET LEVERAGE* ($ in millions) Total debt outstanding @ 9/25/2022 $ 1,356.9 Less debt paid off for two day provision 9/27/2022 0.0 Less: cash on hand @ 9/25/2022 (53.3) Adjust for two day provision 9/27/2022 (31.5) Net debt @ 9/27/2022 $ 1,272.1 Adjusted EBITDA $ 701.3 Net debt to Adjusted EBITDA 1.8x 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.


 
Q3 2022 Earnings Presentation 10 www.patrickind.com