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Patrick Industries Inc. (NASDAQ: PATK)

This presentation provides an overview of Patrick Industries Inc., including their business operations, financial performance, industry outlook, and valuation. It also includes an analysis of their products, sales network, and market trends. The presentation concludes with a recommendation and future outlook for Patrick Industries.

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Patrick Industries Inc. (NASDAQ: PATK)

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  1. Patrick Industries Inc. (NASDAQ: PATK) Qianyi (Cathy) Han Guanrong (Rachel) Fu Jingfeng (Jeffrey)Li Presented: April 29, 2014

  2. AGENDA • Business Overview • Macro-Economic & Industry Overview • Technical Analysis • Financial Ratios • Valuation • Recommendation

  3. BUSINESS OVERVIEW • Incorporated in 1959, in Indiana • 3600 employees • Market Cap : $455MM • 16 Warehouse and distribution centers & 18 manufacturing operations • Business : • Manufacturing: Suppliers to other industrial markets, such as household furniture and manufactures for various products, such as hardwood furniture • Distribution: Wholesale distributor of pre-finished walls and other miscellaneous products Source: PATK 10-K Report, CapitalIQ

  4. PRODUCT OVERVIEW Source: PATK 10-K Report

  5. PRODUCT OVERVIEW • Source: PATK Website

  6. ACQUISITION OVERVIEW Source: PATK 10-K Report

  7. SALES NEWORK Source: PATK 10-K Report

  8. FINANCIAL OVERVIEW Net Sales • Consistent growth • Improving total return • Significant increase in RV industry • Stable Growth in MH and Industrial market Source: PATK 10-K Report

  9. MACROECONOMIC OVERVIEW • Recovery from recession • Consumer discretionary income • Global trend of time and money spent on leisure • Credit regulations and lending in housing starts and mortgage market aided by Fed • Price of gasoline and diesel fuel • Price of raw material/commodity: wood, steel, fiberboard, gypsum Source: IBIS World

  10. INDUSTRY OUTLOOK • Manufactured housing: • Rebound from weaker demands in housing starts back to 2009 and 2010 • Increased substantially (32.9%) in 2012 following the recovery of recession • Private spending in housing construction and improvement is expected to grow till 2019 • Greater sales of existing housing will stimulate the renovation • Lower cost of construction than site-built homes Source: Manufactured Housing Institute IBIS World, Manufactured Home Dealer in US

  11. INDUSTRY OUTLOOK • Recreational vehicle: • Financial crisis disrupted credit flows and lowers buyers capacity to finance their RV purchases • After 2013, RV sales is expected to grow at 3.2% steadily • Shipment declines from 2007 to 2009, but rebound from 2009 to 2012 by 72% Source: Recreational Vehicle Industry Association IBIS World, Recreational Vehicle Dealer

  12. INDUSTRY OUTLOOK • Recreational vehicle: • Number of aging (35-54) consumers enter retirement (baby-boomers) • Lifestyle trend: healthy, outdoor activities, pet friendly, quality family time Source: Recreational Vehicle Industry Association IBIS World, Recreational Vehicle Dealer

  13. INDUSTRY LIFE CYCLE • Maturity stage in RV and MH: • Increase in market share through strategic acquisition • Stable cost structure and brand reputation • Facing fierce competition Decline Maturity Introduction Growth Total Industry Revenue Time • Source: Recreational Vehicle Industry Association • IBIS World, Recreational Vehicle Dealer

  14. PORTER’S FIVE FORCES Source: Patrick Industries, 10-K. 2013

  15. SWOT ANALYSIS Source: Patrick Industries, 10-K. 2013

  16. TECHNICAL ANALYSIS Source: Yahoo! Finance

  17. FINANCIAL RATIOS Source: Patrick Industries, 10-K. 2013

  18. FINANCIAL RATIOS Source: Patrick Industries, 10-K. 2013

  19. VALUATION - COMPS Source: Patrick Industries, 10-K. 2013

  20. VALUATION - COMPS

  21. VALUATION – Discount Rate Source: Patrick Industries, 10-K. 2013 Yahoo! Finance

  22. VALUATION – Projections Source: Patrick Industries, 10-K. 2013

  23. VALUATION - DCF Source: Patrick Industries, 10-K. 2013

  24. VALUATION - Result Current Stock Price: $41.73 Our Valuation: $41.51

  25. RECOMMENDATION WATCH LIST Future Outlook and Concerns • Stable growth in RV industry against high energy costs • Any cost saving from acquisition in the future (e.g.. SG&A) • Opportunity to diversify into other industrial markets Source: Patrick Industries, 10-K. 2013

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