Patrick Industries, Inc. Reports Second Quarter 2024 Financial Results
Second Quarter 2024 Highlights (compared to Second Quarter 2023 unless otherwise noted)
- Net sales increased 10% to
$1.02 billion driven by a 17% increase in RV revenue, an 11% increase in Housing revenue, and our first quarter acquisition of Sportech, which together more than offset a 30% decline in Marine revenue. - Operating margin increased 10 basis points to 8.3%. For the first six months of 2024, operating margin on an adjusted basis improved 40 basis points to 7.7%.
- Net income increased 13% to
$48 million , and diluted earnings per share of$2.16 increased 11%. - For the first six months of 2024, adjusted diluted earnings per share increased 20% to
$3.95 . - Adjusted EBITDA increased 14% to
$130 million ; adjusted EBITDA margin increased 40 basis points to 12.8%. - Cash flow provided by operations was
$173 million for the first six months of the year compared to$178 million in the same period last year. Free cash flow, on a trailing twelve-month basis, was$348 million . - Maintained solid balance sheet and liquidity position, ending the second quarter with a total net leverage ratio of 2.6x and liquidity of
$519 million .
Net sales increased 10% to
Operating income of
Net income increased 13% to
"Our solid revenue and operating margin improvement in the second quarter reflect the strategic diversification investments we have made over the last several years as well as our cost management initiatives and capital expenditures related to automation projects," said
Second Quarter 2024 Revenue by Market Sector
(co
mpared to Second Quarter 2023 unless otherwise noted)
RV (44% of Revenue)
- Revenue of
$450 million increased 17% while wholesale RV industry unit shipments increased 7%. - Content per wholesale RV unit (on a trailing twelve-month basis) decreased by 2% to
$4,966 . Compared to the first quarter of 2024, content per wholesale RV unit (on a trailing twelve-month basis) increased 2%.
Marine (16% of Revenue)
- Revenue of
$158 million decreased 30% while estimated wholesale powerboat industry unit shipments decreased 27%. 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 10% to
$3,935 . Compared to the first quarter of 2024, estimated content per wholesale powerboat unit (on a trailing twelve-month basis) decreased 2%.
Powersports (10% of Revenue)
- Revenue of
$104 million increased 185%, driven primarily by the acquisition of Sportech in the first quarter of 2024.
Housing (30% of Revenue, comprised of
- Revenue of
$305 million increased 11%; estimated wholesale MH industry unit shipments increased 19%; total housing starts decreased 7%. - Estimated content per wholesale MH unit (on a trailing twelve-month basis) increased 1% to
$6,427 . Compared to the first quarter of 2024, estimated content per wholesale MH unit increased slightly from$6,403 .
Balance Sheet, Cash Flow and Capital Allocation
For the first six months of 2024, cash provided by operations was
We remained disciplined in allocating and deploying capital, returning approximately
Our total debt at the end of the second quarter was approximately
Business Outlook and Summary
"We believe Patrick's profitable growth prospects and earnings power remain substantial and expect continued market share gains and strategic acquisitions to enhance our performance when our end markets recover," continued
Conference Call Webcast
Other Items
About
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
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; inventory levels of retailers and manufacturers; 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; 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
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
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
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Second Quarter Ended |
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Six Months Ended |
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($ in thousands, except per share data) |
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$ 1,016,624 |
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$ 920,685 |
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$ 1,950,116 |
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$ 1,820,785 |
Cost of goods sold |
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785,330 |
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710,717 |
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1,513,967 |
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1,416,573 |
GROSS PROFIT |
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231,294 |
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209,968 |
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436,149 |
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404,212 |
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Operating Expenses: |
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Warehouse and delivery |
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38,739 |
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36,031 |
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76,188 |
|
71,876 |
Selling, general and administrative |
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83,588 |
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78,540 |
|
168,834 |
|
160,941 |
Amortization of intangible assets |
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24,278 |
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19,822 |
|
47,096 |
|
39,586 |
Total operating expenses |
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146,605 |
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134,393 |
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292,118 |
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272,403 |
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OPERATING INCOME |
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84,689 |
|
75,575 |
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144,031 |
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131,809 |
Interest expense, net |
|
20,343 |
|
18,260 |
|
40,433 |
|
36,744 |
Income before income taxes |
|
64,346 |
|
57,315 |
|
103,598 |
|
95,065 |
Income taxes |
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16,462 |
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14,958 |
|
20,621 |
|
22,535 |
NET INCOME |
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$ 47,884 |
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$ 42,357 |
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$ 82,977 |
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$ 72,530 |
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BASIC EARNINGS PER COMMON SHARE |
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$ 2.20 |
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$ 1.97 |
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$ 3.83 |
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$ 3.36 |
DILUTED EARNINGS PER COMMON SHARE |
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$ 2.16 |
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$ 1.94 |
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$ 3.75 |
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$ 3.28 |
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Weighted average shares outstanding - Basic |
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21,724 |
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21,521 |
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21,689 |
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21,556 |
Weighted average shares outstanding - Diluted |
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22,169 |
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21,787 |
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22,125 |
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22,151 |
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
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As of |
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($ in thousands) |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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$ 43,960 |
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$ 11,409 |
Trade and other receivables, net |
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252,106 |
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163,838 |
Inventories |
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504,445 |
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510,133 |
Prepaid expenses and other |
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53,383 |
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49,251 |
Total current assets |
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853,894 |
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734,631 |
Property, plant and equipment, net |
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367,761 |
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353,625 |
Operating lease right-of-use assets |
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191,289 |
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177,717 |
Goodwill and intangible assets, net |
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1,583,634 |
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1,288,546 |
Other non-current assets |
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7,292 |
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7,929 |
TOTAL ASSETS |
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$ 3,003,870 |
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$ 2,562,448 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities |
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Current maturities of long-term debt |
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$ 7,500 |
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$ 7,500 |
Current operating lease liabilities |
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52,788 |
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48,761 |
Accounts payable |
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206,605 |
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140,524 |
Accrued liabilities |
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106,774 |
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111,711 |
Total current liabilities |
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373,667 |
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308,496 |
Long-term debt, less current maturities, net |
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1,310,848 |
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1,018,356 |
Long-term operating lease liabilities |
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142,681 |
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132,444 |
Deferred tax liabilities, net |
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67,903 |
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46,724 |
Other long-term liabilities |
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10,267 |
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11,091 |
TOTAL LIABILITIES |
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1,905,366 |
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1,517,111 |
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TOTAL SHAREHOLDERS' EQUITY |
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1,098,504 |
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1,045,337 |
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
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$ 3,003,870 |
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$ 2,562,448 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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Six Months Ended |
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($ in thousands) |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income |
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$ 82,977 |
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$ 72,530 |
Depreciation and amortization |
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81,816 |
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71,492 |
Stock-based compensation expense |
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9,742 |
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7,946 |
Other adjustments to reconcile net income to net cash provided by operating activities |
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1,419 |
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2,978 |
Change in operating assets and liabilities, net of acquisitions of businesses |
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(3,296) |
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23,405 |
Net cash provided by operating activities |
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172,658 |
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178,351 |
CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchases of property, plant and equipment |
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(32,411) |
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(36,491) |
Business acquisitions and other investing activities |
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(354,402) |
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(29,056) |
Net cash used in investing activities |
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(386,813) |
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(65,547) |
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES |
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246,706 |
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(101,740) |
Net increase in cash and cash equivalents |
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32,551 |
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11,064 |
Cash and cash equivalents at beginning of year |
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11,409 |
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22,847 |
Cash and cash equivalents at end of period |
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$ 43,960 |
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$ 33,911 |
Earnings Per Common Share (Unaudited)
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The table below illustrates the calculation for earnings per common share: |
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Second Quarter Ended |
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Six Months Ended |
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($ in thousands, except per share data) |
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Numerator: |
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Earnings for basic earnings per common share calculation |
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$ 47,884 |
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$ 42,357 |
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$ 82,977 |
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$ 72,530 |
Effect of interest on potentially dilutive convertible notes, net of tax |
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— |
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— |
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— |
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162 |
Earnings for diluted earnings per common share calculation |
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$ 47,884 |
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$ 42,357 |
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$ 82,977 |
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$ 72,692 |
Denominator: |
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Weighted average common shares outstanding - basic |
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21,724 |
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21,521 |
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21,689 |
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21,556 |
Weighted average impact of potentially dilutive convertible notes |
|
260 |
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— |
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233 |
|
331 |
Weighted average impact of potentially dilutive securities |
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185 |
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266 |
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203 |
|
264 |
Weighted average common shares outstanding - diluted |
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22,169 |
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21,787 |
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22,125 |
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22,151 |
Earnings per common share: |
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Basic earnings per common share |
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$ 2.20 |
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$ 1.97 |
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$ 3.83 |
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$ 3.36 |
Diluted earnings per common share |
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$ 2.16 |
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$ 1.94 |
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$ 3.75 |
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$ 3.28 |
Non-GAAP Reconciliation (Unaudited)
Use of Non-GAAP Financial Metrics
In addition to reporting financial results in accordance with
The following table reconciles net income to EBITDA and adjusted EBITDA: |
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Second Quarter Ended |
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Six Months Ended |
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($ in thousands) |
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Net income |
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$ 47,884 |
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$ 42,357 |
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$ 82,977 |
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$ 72,530 |
+ Depreciation & amortization |
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41,481 |
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35,982 |
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81,816 |
|
71,492 |
+ Interest expense, net |
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20,343 |
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18,260 |
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40,433 |
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36,744 |
+ Income taxes |
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16,462 |
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14,958 |
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20,621 |
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22,535 |
EBITDA |
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126,170 |
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111,557 |
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225,847 |
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203,301 |
+ Stock-based compensation |
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4,282 |
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2,704 |
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9,742 |
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7,946 |
+ Acquisition related transaction costs |
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— |
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— |
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4,998 |
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— |
+ Acquisition related fair-value inventory step-up |
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— |
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— |
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822 |
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610 |
+ (Gain) Loss on sale of property, plant and equipment |
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(354) |
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123 |
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(368) |
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100 |
Adjusted EBITDA |
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$ 130,098 |
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$ 114,384 |
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$ 241,041 |
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$ 211,957 |
The following table reconciles cash flow from operations to free cash flow on a trailing twelve-month basis: |
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Trailing Twelve Months Ended |
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($ in thousands) |
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Cash flow from operations |
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$ 402,979 |
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$ 515,793 |
Less: purchases of property, plant and equipment |
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(54,907) |
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(71,907) |
Free cash flow |
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$ 348,072 |
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$ 443,886 |
The following table reconciles operating margin to adjusted operating margin: |
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Second Quarter Ended |
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Six Months Ended |
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Operating margin |
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8.3 % |
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8.2 % |
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7.4 % |
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7.2 % |
Acquisition related fair-value inventory step-up |
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— % |
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— % |
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— % |
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0.1 % |
Transaction costs |
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— % |
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— % |
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0.3 % |
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— % |
Adjusted operating margin |
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8.3 % |
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8.2 % |
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7.7 % |
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7.3 % |
The following table reconciles net income to adjusted net income and diluted earnings per common share to adjusted diluted earnings per common share: |
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Second Quarter Ended |
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Six Months Ended |
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($ in thousands, except per share data) |
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Net income |
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$ 47,884 |
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$ 42,357 |
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$ 82,977 |
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$ 72,530 |
+ Acquisition related fair-value inventory step-up |
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— |
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— |
|
822 |
|
610 |
+ Transaction costs |
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— |
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— |
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4,998 |
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— |
- Tax impact of adjustments |
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— |
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— |
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(1,488) |
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(122) |
Adjusted net income |
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$ 47,884 |
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$ 42,357 |
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$ 87,309 |
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$ 73,018 |
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Diluted earnings per common share (per above) |
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$ 2.16 |
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$ 1.94 |
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$ 3.75 |
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$ 3.28 |
Transaction costs, net of tax |
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— |
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— |
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0.17 |
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— |
Acquisition related fair-value inventory step-up, net of tax |
|
— |
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— |
|
0.03 |
|
0.02 |
Adjusted diluted earnings per common share |
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$ 2.16 |
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$ 1.94 |
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$ 3.95 |
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$ 3.30 |
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