First Quarter 2024 Highlights (compared to
First Quarter 2023 unless otherwise noted)
- Net sales increased 4% to $933
million driven by a 15% increase in RV revenue, a 5%
increase in housing revenue, and acquisitions, which together more
than offset lower marine revenue.
- As previously announced, Patrick completed the acquisition of
Sportech, LLC, a supplier of high-value component solutions to the
powersports industry on January 24th,
representing the Company's largest acquisition to date.
- Operating margin increased 20 basis points to 6.4%. Excluding
acquisition transaction costs and purchase accounting adjustments
in both periods, adjusted operating margin increased 70 basis
points year-over-year.
- Net income increased 16% to $35
million compared to $30
million in the first quarter of 2023. Diluted earnings per
share of $1.59 increased 18% compared
to $1.35 for the first quarter of
2023.
- Excluding acquisition transaction costs and purchase accounting
adjustments in both periods, adjusted diluted earnings per share
increased 31% to $1.79.
- Adjusted EBITDA increased 14% to $111
million; adjusted EBITDA margin increased 110 basis points
to 11.9%.
- Cash flow provided by operations was $35
million in the first quarter compared to cash used in
operations of $1 million in the same
period last year. On a trailing twelve-month basis, operating cash
flow through the first quarter of 2024 was $445 million, an increase of 3% compared to
$434 million through the first
quarter of 2023.
- Maintained solid balance sheet and liquidity position, with net
leverage at 2.8x, which reflects the acquisition of Sportech in
January, helping to ensure ability to capitalize on potential
future opportunities.
ELKHART,
Ind., May 2, 2024 /PRNewswire/ -- Patrick
Industries, Inc. (NASDAQ: PATK) ("Patrick" or the "Company"), a
leading component solutions provider for the Outdoor Enthusiast and
Housing markets, today reported financial results for the first
quarter ended March 31, 2024.
Net sales increased 4% to $933
million, an increase of $33
million compared to the first quarter of 2023. The increase
in sales was primarily driven by higher revenue from our RV and
housing end markets combined with the acquisition of Sportech,
which together more than offset lower revenue from our marine end
market.
Operating income of $59 million in
the first quarter of 2024 increased $3
million compared to $56
million in the first quarter of 2023. Operating margin of
6.4% increased 20 basis points compared to 6.2% in the same period
a year ago, as acquisition transaction costs and purchase
accounting adjustments were more than offset by higher fixed cost
absorption within our RV businesses and the benefits of cost
savings initiatives executed in prior periods. Excluding
acquisition transaction costs and purchase accounting adjustments
in both periods, adjusted operating margin improved 70 basis points
to 7.0% in the quarter.
Net income increased 16% to $35
million compared to $30
million in the first quarter of 2023. Diluted earnings per
share of $1.59 increased 18% compared
to $1.35 for the first quarter of
2023.
Excluding acquisition transaction costs and purchase accounting
adjustments in both periods, adjusted net income increased 29% to
$39 million or $1.79 per diluted share.
"Patrick returned to growth in the first quarter as a result of
our disciplined operating management, market share growth, and
strategic acquisition and diversification strategy," said
Andy Nemeth, Chief Executive
Officer. "We generated 15% higher RV revenue, which when coupled
with stronger housing revenue and the first quarter acquisition of
Sportech more than offset a 35% decline in our marine revenue. We
leveraged our cost structure and delivered higher consolidated net
sales and profit along with margin expansion. I am extremely proud
of the entire Patrick team for their hard work during the quarter
as our focus on providing the highest quality service and
delivering value-added solutions supported our customers across our
end markets. Our strong financial foundation and liquidity position
facilitated our acquisition of Sportech, solidifying powersports as
another Outdoor Enthusiast platform for Patrick. Our first quarter
results further demonstrate the benefits of our diversification
strategy, and when combined with our customer-focused philosophy,
investment in higher-engineered products and ability to scale
quickly to OEM needs, help to ensure that Patrick is in an ideal
position to drive future organic and strategic growth as we look
forward to an expected recovery in demand."
Jeff Rodino, President – RV,
said, "We are excited about the future of Patrick, as we realize
the benefits of the investments we have made in business, talent,
and infrastructure. Our team hit the ground running in the first
quarter as we supported and collaborated with our customers,
remaining agile and ready to pivot when necessary. We remain
focused on profitable growth and generating free cash flow while
maintaining a balanced capital allocation strategy, with a focus on
expanding our presence within our end markets as we strive to make
Patrick the supplier of choice to the Outdoor Enthusiast and
Housing markets."
First Quarter 2024 Revenue by Market
Sector
(compared to First Quarter 2023 unless
otherwise noted)
RV (45% of Revenue)
- Revenue of $421 million increased
15% while wholesale RV industry unit shipments increased 9%.
- Content per wholesale RV unit (on a trailing twelve-month
basis) decreased 9% to $4,859.
Compared to the fourth quarter of 2023, content per wholesale RV
unit (on a trailing twelve-month basis) increased 1%, representing
the first sequential increase in content per unit since the first
quarter of 2023.
Marine (17% of Revenue)
- Revenue of $155 million decreased
35% while estimated wholesale powerboat industry unit shipments
decreased 34%. Powersports revenue was previously included in our
Marine end market. End market revenue and content per unit reflect
this change for the relevant periods.
- Estimated content per wholesale powerboat unit (on a trailing
twelve-month basis) decreased 9% to $4,049. Compared to the fourth quarter of 2023,
estimated content per wholesale powerboat unit (on a trailing
twelve-month basis) decreased less than 1%.
Powersports (9% of Revenue)
- Revenue of $83 million increased
152%, driven primarily by the acquisition of Sportech.
Housing (29% of Revenue, comprised of Manufactured
Housing ("MH") and Industrial)
- Revenue of $275 million increased
5%; estimated wholesale MH industry unit shipments increased 13%;
total housing starts increased 1%.
- Estimated MH content per wholesale MH unit (on a trailing
twelve-month basis) increased 1% to $6,422. Compared to the fourth quarter of 2023,
estimated content per wholesale MH unit (on a trailing twelve-month
basis) increased 1%.
Balance Sheet, Cash Flow and Capital Allocation
For the first three months of 2024, cash provided by operations
was $35 million compared to cash used
in operations of $1 million for the
prior year period. This improvement was driven primarily by a
$27 million reduction in working capital utilization and a
$5 million increase in net income.
Purchases of property, plant and equipment totaled $15 million in the first quarter of 2024,
reflecting continued investments in alignment with our automation
and technology initiatives. On a trailing twelve-month basis, free
cash flow through the first quarter of 2024 was $391 million, an increase of 11% compared to
$352 million through the first
quarter of 2023. Our long-term debt increased approximately
$373 million during the first quarter of 2024 primarily to
fund the acquisition of Sportech.
We remained disciplined in allocating and deploying capital,
returning approximately $13 million
to shareholders in the first quarter of 2024 through dividends. We
remain opportunistic on share repurchases and had $78 million left authorized under our current
plan at the end of the first quarter.
Our total debt at the end of the first quarter was approximately
$1.41 billion, resulting in a total
net leverage ratio of 2.8x (as calculated in accordance with our
credit agreement). Pro forma net leverage at the time of the
acquisition of Sportech in January
2024 was approximately 2.9x. Available liquidity, comprised
of borrowing availability under our credit facility and cash on
hand, was approximately $413
million.
Business Outlook and Summary
"Our team continues to execute on our business objectives,
including providing innovative product solutions, generating
long-term profitable growth, maintaining a strong financial
foundation, and our goal of providing a best-in-class customer
experience delivering value for all stakeholders," continued
Mr. Nemeth. "We are poised and ready to meet the opportunities
and challenges that may present themselves this year, as evidenced
by our solid performance over the last two years despite
the headwinds we faced in our markets. The RV and MH markets
returned to year-over-year wholesale shipment growth in the first
quarter and we believe our marine end market will begin to
stabilize in the back half of 2024. We have a number of
product innovations in development which will also help drive
further organic growth. Our job is to remain operationally and
financially agile, ready to support our customers in any
environment. As Patrick enters its 65th year as a company, we
remain optimistic about the future and see positive long-term
trends within the Outdoor Enthusiast and Housing markets we serve,
with numerous profitable organic and strategic growth opportunities
available to the Company in the future."
Conference Call Webcast
Patrick Industries will host an online webcast of its first
quarter 2024 earnings conference call that can be accessed on the
Company's website, www.patrickind.com, under "For Investors," on
Thursday, May 2, 2024 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 (NASDAQ: PATK) is a leading component solutions provider
serving the RV, Marine, Powersports and Housing markets. Since
1959, Patrick has empowered manufacturers and outdoor enthusiasts
to achieve next-level recreation experiences. Our customer-focused
approach brings together design, manufacturing, distribution, and
transportation in a full solutions model that defines us as a
trusted partner. Patrick is home to more than 85 leading brands,
all united by a commitment to quality, customer service, and
innovation. Headquartered in Elkhart,
IN, Patrick employs approximately 10,000 skilled team
members throughout the United
States. For more information on Patrick, our brands, and
products, please visit www.patrickind.com.
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 effects of external macroeconomic factors, including
adverse developments in world financial markets, disruptions
related to tariffs and other trade issues, and global supply chain
interruptions; adverse economic and business conditions, including
inflationary pressures, 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, marine
and powersports products; public health emergencies or pandemics,
such as the COVID-19 pandemic; the imposition of, or changes in,
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 cyberattacks 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, including 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, including, but not limited to,
uncertainties surrounding the Company's further investment and
initiatives in the powersports market; increases in interest rates
and oil and gasoline prices; the ability to retain key executive
and management personnel; the impact on our business resulting from
wars and military conflicts such as war in Ukraine and evolving conflict in Israel, Gaza
and Syria, and throughout the
Middle East; natural disasters or
other unforeseen events, and adverse weather conditions.
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, 2023,
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.
PATRICK INDUSTRIES,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
|
|
|
|
|
|
|
First Quarter
Ended
|
($ in thousands, except
per share data)
|
|
March 31,
2024
|
|
April 2,
2023
|
NET
SALES
|
|
$
933,492
|
|
$
900,100
|
Cost of goods
sold
|
|
728,637
|
|
705,856
|
GROSS
PROFIT
|
|
204,855
|
|
194,244
|
Operating
Expenses:
|
|
|
|
|
Warehouse and
delivery
|
|
37,449
|
|
35,845
|
Selling, general and
administrative
|
|
85,246
|
|
82,401
|
Amortization of intangible
assets
|
|
22,818
|
|
19,764
|
Total operating expenses
|
|
145,513
|
|
138,010
|
OPERATING
INCOME
|
|
59,342
|
|
56,234
|
Interest expense,
net
|
|
20,090
|
|
18,484
|
Income before
income taxes
|
|
39,252
|
|
37,750
|
Income taxes
|
|
4,159
|
|
7,577
|
NET
INCOME
|
|
$
35,093
|
|
$
30,173
|
BASIC EARNINGS PER
COMMON SHARE
|
|
$
1.62
|
|
$
1.40
|
DILUTED EARNINGS PER
COMMON SHARE
|
|
$
1.59
|
|
$
1.35
|
|
|
|
|
|
Weighted average shares
outstanding - basic
|
|
21,653
|
|
21,591
|
Weighted average shares
outstanding - diluted
|
|
22,080
|
|
22,512
|
PATRICK INDUSTRIES,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
|
|
|
|
|
|
As of
|
($ in
thousands)
|
|
March 31,
2024
|
|
December 31,
2023
|
ASSETS
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
17,610
|
|
$
11,409
|
Trade receivables,
net
|
|
278,337
|
|
163,838
|
Inventories
|
|
514,543
|
|
510,133
|
Prepaid expenses and
other
|
|
48,884
|
|
49,251
|
Total current assets
|
|
859,374
|
|
734,631
|
Property, plant
and equipment, net
|
|
371,128
|
|
353,625
|
Operating lease
right-of-use assets
|
|
190,507
|
|
177,717
|
Goodwill and
intangible assets, net
|
|
1,604,482
|
|
1,288,546
|
Other non-current
assets
|
|
7,385
|
|
7,929
|
TOTAL ASSETS
|
|
$
3,032,876
|
|
$
2,562,448
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Current maturities of
long-term debt
|
|
$
7,500
|
|
$
7,500
|
Current operating lease
liabilities
|
|
51,839
|
|
48,761
|
Accounts payable
|
|
196,747
|
|
140,524
|
Accrued
liabilities
|
|
104,456
|
|
111,711
|
Total current liabilities
|
|
360,542
|
|
308,496
|
Long-term debt,
less current maturities, net
|
|
1,392,099
|
|
1,018,356
|
Long-term
operating lease liabilities
|
|
142,799
|
|
132,444
|
Deferred tax
liabilities, net
|
|
67,903
|
|
46,724
|
Other long-term
liabilities
|
|
10,997
|
|
11,091
|
TOTAL LIABILITIES
|
|
1,974,340
|
|
1,517,111
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY
|
|
1,058,536
|
|
$
1,045,337
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
$
3,032,876
|
|
$
2,562,448
|
PATRICK INDUSTRIES,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
First Quarter
Ended
|
|
|
|
|
|
($ in
thousands)
|
|
March 31,
2024
|
|
April 2,
2023
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
|
$
35,093
|
|
$
30,173
|
Depreciation and
amortization
|
|
40,335
|
|
35,510
|
Stock-based
compensation expense
|
|
5,460
|
|
5,242
|
Other adjustments to
reconcile net income to net cash
provided by operating activities
|
|
853
|
|
2,056
|
Change in operating
assets and liabilities, net of acquisitions
of businesses
|
|
(46,565)
|
|
(73,931)
|
Net cash provided
by (used in) operating activities
|
|
35,176
|
|
(950)
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
Purchases of property,
plant and equipment
|
|
(15,495)
|
|
(20,266)
|
Business
acquisitions and other investing activities
|
|
(355,229)
|
|
(3,311)
|
Net cash used in
investing activities
|
|
(370,724)
|
|
(23,577)
|
NET CASH FLOWS
PROVIDED BY FINANCING ACTIVITIES
|
|
341,749
|
|
32,463
|
Net increase in cash
and cash equivalents
|
|
6,201
|
|
7,936
|
Cash and cash
equivalents at beginning of year
|
|
11,409
|
|
22,847
|
Cash and cash
equivalents at end of period
|
|
$
17,610
|
|
$
30,783
|
PATRICK INDUSTRIES,
INC.
Earnings Per Common
Share (Unaudited)
|
|
The table below
illustrates the calculation for earnings per common
share:
|
|
|
|
First Quarter
Ended
|
($ in thousands, except
per share data)
|
|
March 31,
2024
|
|
April 2,
2023
|
Numerator:
|
|
|
|
|
Earnings for basic
earnings per common share calculation
|
|
$
35,093
|
|
$
30,173
|
Effect of interest on
potentially dilutive convertible notes, net of tax
|
|
—
|
|
162
|
Earnings for diluted
earnings per common share calculation
|
|
$
35,093
|
|
$
30,335
|
Denominator:
|
|
|
|
|
Weighted average common
shares outstanding - basic
|
|
21,653
|
|
21,591
|
Weighted average
impact of potentially dilutive convertible notes
|
|
205
|
|
658
|
Weighted average
impact of potentially dilutive securities
|
|
222
|
|
263
|
Weighted average common
shares outstanding - diluted
|
|
22,080
|
|
22,512
|
Earnings per common
share:
|
|
|
|
|
Basic earnings per
common share
|
|
$
1.62
|
|
$
1.40
|
Diluted earnings per
common share
|
|
$
1.59
|
|
$
1.35
|
PATRICK INDUSTRIES, INC.
Non-GAAP
Reconciliation (Unaudited)
Use of Non-GAAP 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, free cash flow,
earnings before interest, taxes, depreciation and amortization
("EBITDA"), adjusted EBITDA, adjusted net income, adjusted diluted
earnings per share (adjusted diluted EPS), adjusted operating
margin, adjusted EBITDA margin, 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, free cash flow, EBITDA, adjusted EBITDA, adjusted
net income, adjusted dilutive EPS, adjusted operating margin,
adjusted EBITDA margin, 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. We calculate EBITDA by adding back depreciation and
amortization, net interest expense, and income tax expense to net
income. We calculate adjusted EBITDA by taking EBITDA and adding
back stock-based compensation and loss on sale of property, plant
and equipment, acquisition related costs, acquisition-related
fair-value inventory step-up and subtracting out gain on sale of
property, plant and equipment. Adjusted net income is
calculated by removing the impact of acquisition related
transaction costs, net of tax and acquisition-related fair-value
inventory step-up, net of tax. Adjusted diluted EPS is calculated
as adjusted net income attributable to common shares divided by our
weighted average shares outstanding. Adjusted operating margin is
calculated by removing the impact of acquisition related
transaction costs and acquisition-related fair-value inventory
step-up. We calculate free cash flow by subtracting cash paid for
purchases of property, plant and equipment from cash flow from
operations. RV wholesale unit shipments are provided by the RV
Industry Association. Marine wholesale unit shipments are Company
estimates based on data 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.
The following table
reconciles net income to EBITDA and adjusted EBITDA:
|
|
|
|
First Quarter
Ended
|
($ in
thousands)
|
|
March 31,
2024
|
|
April 2,
2023
|
Net
income
|
|
$
35,093
|
|
$
30,173
|
+ Depreciation &
amortization
|
|
40,335
|
|
35,510
|
+ Interest expense,
net
|
|
20,090
|
|
18,484
|
+ Income
taxes
|
|
4,159
|
|
7,577
|
EBITDA
|
|
99,677
|
|
91,744
|
+ Stock-based
compensation
|
|
5,460
|
|
5,242
|
+ Acquisition related
transaction costs
|
|
4,998
|
|
—
|
+ Acquisition related
fair-value inventory step-up
|
|
822
|
|
610
|
- Gain on sale
of property, plant and equipment
|
|
(14)
|
|
(23)
|
Adjusted
EBITDA
|
|
$
110,943
|
|
$
97,573
|
The following table
reconciles cash flow from operations to free cash flow on a
trailing twelve-month basis:
|
|
|
|
Trailing Twelve Months
Ended
|
($ in
thousands)
|
|
March 31,
2024
|
|
April 2,
2023
|
Cash flow from
operations
|
|
$
444,798
|
|
$
433,827
|
Less: purchases of
property, plant and equipment
|
|
(54,216)
|
|
(81,481)
|
Free cash
flow
|
|
$
390,582
|
|
$
352,346
|
The following table
reconciles operating margin to adjusted operating
margin:
|
|
|
|
First Quarter
Ended
|
|
|
March 31,
2024
|
|
April 2,
2023
|
Operating
margin
|
|
6.4 %
|
|
6.2 %
|
Acquisition-related fair-value inventory step-up
|
|
0.1 %
|
|
0.1 %
|
Transaction
costs
|
|
0.5 %
|
|
— %
|
Adjusted operating
margin
|
|
7.0 %
|
|
6.3 %
|
The following table
reconciles net income to adjusted net income and diluted earnings
per common share to
adjusted diluted earnings per common share:
|
|
|
|
First Quarter
Ended
|
($ in thousands, except
per share data)
|
|
March 31,
2024
|
|
April 2,
2023
|
Net income
|
|
$
35,093
|
|
$
30,173
|
+ Acquisition-related
fair-value inventory step-up
|
|
822
|
|
610
|
+ Transaction
costs
|
|
4,998
|
|
—
|
- Tax impact of
adjustments
|
|
(1,488)
|
|
(122)
|
Adjusted net
income
|
|
$
39,425
|
|
$
30,661
|
|
|
|
|
|
Diluted earnings per
common share (as reported)
|
|
$
1.59
|
|
$
1.35
|
Transaction costs, net
of tax
|
|
0.17
|
|
—
|
Acquisition related
fair-value inventory step-up, net of tax
|
|
0.03
|
|
0.02
|
Adjusted diluted
earnings per common share
|
|
$
1.79
|
|
$
1.37
|
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SOURCE Patrick Industries, Inc.