PATRICK INDUSTRIES, INC. REPORTS FIRST QUARTER 2023 FINANCIAL RESULTS
Patrick Industries (NASDAQ: PATK) reported a significant decline in financial performance for the first quarter of 2023. Net sales amounted to $900 million, a 33% decrease from $1.34 billion in Q1 2022, largely impacted by a 54% drop in RV wholesale shipments, despite a 25% growth in marine sales. Gross profit fell 34% to $194 million, with net income down 73% to $30 million. Diluted earnings per share (EPS) decreased 70% to $1.35. However, free cash flow improved significantly, up 222% to $352 million. The company returned $15 million to shareholders through dividends and share repurchases. Despite challenges, management expressed optimism about long-term market positioning and capitalizing on future opportunities.
- Free cash flow improved by 222% to $352 million.
- Increased market share in the marine sector by 25%.
- Net sales decreased by 33% to $900 million.
- Gross profit fell by 34% to $194 million.
- Net income dropped 73% to $30 million.
- Diluted EPS decreased 70% to $1.35.
- Operating income decreased 65% to $56 million.
First Quarter 2023 Highlights (compared to First Quarter 2022 unless otherwise noted)
- Net sales of
$900 million decreased33% , as25% growth in our marine end-market sales partially offset the impact of a54% reduction in RV industry wholesale shipments on our RV sales - Gross profit of
$194 million decreased34% , gross margin decreased 40 basis points to21.6% - Operating income of
$56 million decreased65% , operating margin decreased 590 basis points to6.2% - Net income of
$30 million decreased73% - Diluted earnings per share of
$1.35 decreased70% - Adjusted EBITDA of
$97 million decreased49% , adjusted EBITDA margin decreased 350 basis points to10.8% - Cash used in operations of
$1 million improved compared to cash used in operations of$23 million - On a trailing twelve-month basis, free cash flow through the first quarter of 2023 was
$352 million , an increase of222% compared to$110 million through the first quarter of 2022 - Returned
$15 million to shareholders in the quarter, including$4 million through common share purchases and$11 million through dividends
ELKHART, Ind., April 27, 2023 /PRNewswire/ -- Patrick Industries, Inc. (NASDAQ: PATK) ("Patrick" or the "Company"), a leading component solutions provider for the Leisure Lifestyle and Housing markets today reported financial results for the first quarter ended April 2, 2023.
Net sales in the first quarter of 2023 were
Operating income of
Net income decreased
"Our first quarter performance continues to demonstrate the strength of our strategic diversification and the resilience of our overall business model as we generated solid first quarter profitability despite a slowing economy and a
Jeff Rodino, President, said, "We are continuing to flex our business model in this uncertain macroeconomic and business environment with a strategic long-term focus on further solidifying our infrastructure by continuing to leverage the strength of our cash flows and make meaningful investments in automation and production efficiencies, flexible capacity, and human capital. These investments will help us weather the current headwinds we face and perhaps more importantly, provide a solid foundation to grow our market share and execute on attractive acquisition opportunities as we look to be BETTER Together with our customers, team members, shareholders, and communities."
First Quarter 2023 Revenue by Market Sector
(compared to First Quarter 2022 unless otherwise noted)
RV (
- Revenue of
$367 million decreased55% , in line with the decrease in wholesale RV industry unit shipments of54% . - Content per wholesale RV unit (on a trailing twelve-month basis) increased
22% to$5,349 .
Marine (
- Revenue of
$276 million increased25% while estimated wholesale powerboat industry unit shipments increased14% . - Estimated content per wholesale powerboat unit (on a trailing twelve-month basis) increased
27% to$5,266 .
Housing (
- Revenue of
$257 million decreased14% ; estimated wholesale MH industry unit shipments decreased28% ; total housing starts decreased18% , with single-family housing starts decreasing29% while multifamily housing starts increased5% . - Estimated MH content per wholesale MH unit (on a trailing twelve-month basis) increased
16% to$6,353 .
Balance Sheet, Cash Flow and Capital Allocation
Cash used in operations of
In alignment with our capital allocation strategy, we returned approximately
Our total debt at the end of the first quarter was approximately
Business Outlook and Summary
"We remain optimistic about the long-term outlook for all our end markets and believe we are well positioned to not only take advantage of strategic opportunities that present themselves in the short term, but to also pivot and drive utilization and capitalize on opportunities that arise when our markets stabilize and rebound," said Mr. Nemeth. "We understand the headwinds we face as elevated interest rates, inflation, and macroeconomic uncertainty have weighed on our end markets. We are confident in the strength of our balance sheet, liquidity and our favorable long-term capital structure with no material debt maturities until 2027. Our strong operating platform and diversified business model with less reliance on a single end market has improved our financial resilience and helped to ensure greater stability despite the dynamics of the current business backdrop."
Conference Call Webcast
Patrick Industries will host an online webcast of its first quarter 2023 earnings conference call that can be accessed on the Company's website, www.patrickind.com, under "For Investors," on Thursday, April 27, 2023 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 multifamily housing, hospitality, institutional and commercial markets. Founded in 1959, Patrick is based in Elkhart, Indiana, with approximately 11,000 team members throughout the United States.
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, 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, 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 and subtracting out gain on sale of property, plant and equipment. 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.
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, including as a result of the current war in Ukraine; 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, and marine products; 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 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; 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, 2022, 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 | ||||
(thousands except per share data) | April 2, 2023 | March 27, 2022 | ||
NET SALES | $ 900,100 | $ 1,342,175 | ||
Cost of goods sold | 705,856 | 1,046,830 | ||
GROSS PROFIT | 194,244 | 295,345 | ||
Operating Expenses: | ||||
Warehouse and delivery | 35,845 | 41,169 | ||
Selling, general and administrative | 82,401 | 75,560 | ||
Amortization of intangible assets | 19,764 | 16,861 | ||
Total operating expenses | 138,010 | 133,590 | ||
OPERATING INCOME | 56,234 | 161,755 | ||
Interest expense, net | 18,484 | 14,886 | ||
Income before income taxes | 37,750 | 146,869 | ||
Income taxes | 7,577 | 34,196 | ||
NET INCOME | $ 30,173 | $ 112,673 | ||
BASIC EARNINGS PER COMMON SHARE | $ 1.40 | $ 5.00 | ||
DILUTED EARNINGS PER COMMON SHARE | $ 1.35 | $ 4.54 | ||
Weighted average shares outstanding - Basic | 21,591 | 22,517 | ||
Weighted average shares outstanding - Diluted | 22,512 | 24,882 | ||
PATRICK INDUSTRIES, INC. | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||
As of | ||||
(thousands) | April 2, 2023 | December 31, 2022 | ||
ASSETS | ||||
Current Assets | ||||
Cash and cash equivalents | $ 30,783 | $ 22,847 | ||
Trade receivables, net | 256,440 | 172,890 | ||
Inventories | 628,383 | 667,841 | ||
Prepaid expenses and other | 38,872 | 46,326 | ||
Total current assets | 954,478 | 909,904 | ||
Property, plant and equipment, net | 353,599 | 350,572 | ||
Operating lease right-of-use assets | 166,222 | 163,674 | ||
Goodwill and intangible assets, net | 1,334,012 | 1,349,493 | ||
Other non-current assets | 8,519 | 8,828 | ||
TOTAL ASSETS | $ 2,816,830 | $ 2,782,471 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current Liabilities | ||||
Current maturities of long-term debt | $ 7,500 | $ 7,500 | ||
Current operating lease liabilities | 44,977 | 44,235 | ||
Accounts payable | 149,260 | 142,910 | ||
Accrued liabilities | 130,943 | 172,595 | ||
Total current liabilities | 332,680 | 367,240 | ||
Long-term debt, less current maturities, net | 1,332,158 | 1,276,149 | ||
Long-term operating lease liabilities | 124,373 | 122,471 | ||
Deferred tax liabilities, net | 48,782 | 48,392 | ||
Other long-term liabilities | 9,015 | 13,050 | ||
TOTAL LIABILITIES | 1,847,008 | 1,827,302 | ||
TOTAL SHAREHOLDERS' EQUITY | 969,822 | 955,169 | ||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 2,816,830 | $ 2,782,471 | ||
PATRICK INDUSTRIES, INC. | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||
First Quarter Ended | ||||
(thousands) | ||||
April 2, 2023 | March 27, 2022 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | $ 30,173 | $ 112,673 | ||
Depreciation and amortization | 35,510 | 30,201 | ||
Stock-based compensation expense | 5,242 | 5,111 | ||
Amortization of convertible notes debt discount | 324 | 449 | ||
Other adjustments to reconcile net income to net cash provided by operating activities | 1,732 | (3,804) | ||
Change in operating assets and liabilities, net of acquisitions of businesses | (73,931) | (167,669) | ||
Net cash used in operating activities | (950) | (23,039) | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchases of property, plant and equipment | (20,266) | (18,668) | ||
Business acquisitions and other investing activities | (3,311) | (124,451) | ||
Net cash used in investing activities | (23,577) | (143,119) | ||
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 32,463 | 107,155 | ||
Increase (decrease) in cash and cash equivalents | 7,936 | (59,003) | ||
Cash and cash equivalents at beginning of year | 22,847 | 122,849 | ||
Cash and cash equivalents at end of period | $ 30,783 | $ 63,846 | ||
PATRICK INDUSTRIES, INC.
Earnings 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
First Quarter Ended | ||||
(thousands except per share data) | April 2, 2023 | March 27, 2022 | ||
Numerator: | ||||
Earnings for basic per share calculation | $ 30,173 | $ 112,673 | ||
Effect of interest on potentially dilutive convertible notes, net of tax | 162 | 317 | ||
Earnings for dilutive per share calculation | $ 30,335 | $ 112,990 | ||
Denominator: | ||||
Weighted average common shares outstanding - basic | 21,591 | 22,517 | ||
Weighted average impact of potentially dilutive convertible notes | 658 | 2,046 | ||
Weighted average impact of potentially dilutive securities | 263 | 319 | ||
Weighted average common shares outstanding - diluted | 22,512 | 24,882 | ||
Earnings per common share: | ||||
Basic earnings per common share | $ 1.40 | $ 5.00 | ||
Diluted earnings per common share | $ 1.35 | $ 4.54 | ||
PATRICK INDUSTRIES, INC. | ||||
Non-GAAP Reconciliation (Unaudited) | ||||
The following table reconciles net income to EBITDA and adjusted EBITDA: | ||||
First Quarter Ended | ||||
(thousands) | April 2, 2023 | March 27, 2022 | ||
Net income | $ 30,173 | $ 112,673 | ||
+ Depreciation & amortization | 35,510 | 30,201 | ||
+ Interest expense, net | 18,484 | 14,886 | ||
+ Income taxes | 7,577 | 34,196 | ||
EBITDA | 91,744 | 191,956 | ||
+ Stock based compensation | 5,242 | 5,111 | ||
- Gain on sale of property, plant and equipment | (23) | (5,501) | ||
Adjusted EBITDA | $ 96,963 | $ 191,566 | ||
The following table reconciles cash flow from operations to free cash flow on a trailing twelve-month basis: | ||||
Trailing Twelve Months Ended | ||||
(thousands) | April 2, 2023 | March 27, 2022 | ||
Cash flow from operations | $ 433,827 | $ 178,799 | ||
Less: purchases of property, plant and equipment | (81,481) | (69,233) | ||
Free cash flow | $ 352,346 | $ 109,566 | ||
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SOURCE Patrick Industries, Inc.
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