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Patrick Industries, Inc. Reports Third Quarter 2021 Financial Results

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Patrick Industries reported a 51% increase in net sales for Q3 2021, amounting to $1.1 billion, driven by strong demand in RV, marine, and housing markets. Operating income rose by 56% to $93.3 million, with a margin of 8.8%. Net income grew 54% to $57.4 million, while diluted EPS increased 51% to $2.45. Noteworthy strategic acquisitions include Coyote Manufacturing and Tumacs Covers, enhancing their marine portfolio. Despite a 6% decline in operating cash flow to $68.7 million, the outlook remains positive with visibility into 2022.

Positive
  • Net sales rose 51% to $1.1 billion.
  • Operating income increased 56% to $93.3 million.
  • Net income grew 54% to $57.4 million.
  • Diluted earnings per share increased 51% to $2.45.
  • Successful strategic acquisitions to strengthen marine portfolio.
Negative
  • Operating cash flow decreased 6% to $68.7 million.

ELKHART, Ind., Oct. 28, 2021 /PRNewswire/ -- Patrick Industries, Inc. (NASDAQ: PATK), a leading component solutions provider for the RV, marine, manufactured housing ("MH") and industrial markets today reported financial results for the third quarter ended September 26, 2021.

Net sales in the third quarter of 2021 increased $359.5 million, or 51%, to $1.1 billion from $700.7 million in the third quarter of 2020. The increase reflects continued strong performance in our RV and marine leisure lifestyle markets as well as the MH and industrial end markets.

Operating income of $93.3 million increased $33.5 million, or 56%, from $59.8 million in the third quarter of 2020. Operating margin of 8.8% in the third quarter of 2021 increased 30 basis points compared to 8.5% in the same period a year ago.

Net income was $57.4 million, an increase of 54% compared to $37.3 million in the third quarter of 2020. Diluted earnings per share was $2.45, an increase of 51% for the third quarter of 2021 compared to $1.62 for the third quarter of 2020.

"Market conditions across our platform continue to reflect strong trends and expectations while providing good visibility into 2022," said Andy Nemeth, Chief Executive Officer. "The talent, resilience, and creative initiatives of our team members, in combination with the partnership of our customers, helped us to successfully navigate an incredibly complex and dynamic supply chain environment. Retail demand for leisure lifestyle products remains high, and has resulted in decreasing dealer inventories and increasing OEM backlogs despite record industry production levels. At the same time, our sales to the housing and industrial markets continue to benefit from low dealer inventories, attractive financing rates and robust home improvement and remodel activity."

Jeff Rodino, President, said, "During the quarter, we welcomed the Coyote Manufacturing and Tumacs Covers teams into the Patrick family, a continuation of our strategic expansion of our marine portfolio and custom marine solutions capabilities. Additionally, our focus on human capital is translating into investments in our people and the tools they need to create solutions and innovations for our customers, while at the same time we continue to invest in cultural initiatives that support the ongoing development of our team members."

Third Quarter 2021 Revenue by Market Sector 
(compared to Third Quarter 2020 unless otherwise noted)

RV (60% of Revenue)

  • Revenue of $633.2 million increased 50% while wholesale RV industry unit shipments increased 23%
  • Content per wholesale RV unit (on a trailing twelve-month basis) increased 19% to $3,735

Marine (16% of Revenue)

  • Revenue of $173.1 million increased 85% while estimated wholesale powerboat industry unit shipments increased 15%
  • Estimated content per wholesale powerboat unit (on a trailing twelve-month basis) increased 66% to $3,166

MH (13% of Revenue)

  • Revenue of $134.6 million increased 25% while estimated wholesale MH industry unit shipments increased 9%
  • Estimated content per wholesale MH unit (on a trailing twelve-month basis) increased 10% to $4,961

Industrial (11% of Revenue)

  • Revenue of $119.3 million increased 52% while housing starts increased 9%

Balance Sheet, Cash Flow and Capital Allocation

Operating cash flow for the third quarter of 2021 of $68.7 million decreased 6% compared to $73.4 million in the third quarter of 2020, reflecting continued resource utilization and strategic investment in inventory in support of strong business activity and customer supply needs. Business acquisitions in the third quarter of 2021 totaled $43.5 million, including the previously announced acquisitions of Coyote Manufacturing, a leading designer, fabricator and manufacturer of a variety of steel and aluminum products primarily for the marine OEM market, and Tumacs Covers, a leading manufacturer of custom designed boat covers, canvas frames, and bimini tops, primarily serving marine OEMs and dealers. Capital expenditures in the third quarter of 2021 totaled $17.8 million, compared to $10.9 million in the third quarter of 2020, reflecting continued forward-looking investments in infrastructure and automation initiatives to better align resources for increased scalability and to support customer growth.

In alignment with our capital allocation strategy, we returned $16.8 million to shareholders in the third quarter of 2021, including $10.4 million through opportunistic repurchases of 129,000 shares and $6.4 million of dividends.

Our net debt at the end of the quarter was approximately $1.1 billion, resulting in a net leverage ratio of 2.2x (as calculated in accordance with our credit agreement). Available liquidity, comprised of borrowing availability under our credit facility and cash on hand, was approximately $454 million.

Business Outlook and Summary

"Retail and wholesale demand patterns and projections continue to point towards an extension of the RV, marine and MH dealer inventory replenishment cycle and the resulting OEM production requirements well into 2022, and likely into 2023," said Mr. Nemeth. "We are heavily focused on automation and innovation opportunities and initiatives across our platform as we plan for fiscal 2022 and beyond to enhance and drive scalability, flexibility, efficiencies, and continuous improvement. Additionally, ongoing supply chain initiatives, supported by our strong liquidity and investments in technology, systems, and human capital, will continue to provide the opportunity to serve our customers as they flex their production models and work to replenish heavily depleted dealer lots and reduce record backlogs. We continue to maintain a patient, disciplined, and focused capital allocation strategy to further drive long-term value for our customers, shareholders, team members, partners, and the communities in which we operate."

Conference Call Webcast

As previously announced, Patrick Industries will host an online webcast of its third quarter 2021 earnings conference call that can be accessed on the Company's website, www.patrickind.com, under "For Investors," on Thursday, October 28, 2021 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 11,000 employees and 160 businesses 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. 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; adverse economic and business conditions, including cyclicality and seasonality in the industries we sell our products; 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; 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 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, 2020, 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)


















Third Quarter Ended


Nine Months Ended

(thousands except per share data)

September 26, 2021


September 27, 2020


September 26, 2021


September 27, 2020









NET SALES

$

1,060,177



$

700,707



$

2,930,613



$

1,713,984


Cost of goods sold

852,016



567,210



2,356,443



1,397,285


           GROSS PROFIT

208,161



133,497



574,170



316,699










 Operating Expenses:








     Warehouse and delivery

35,885



25,263



100,613



70,204


     Selling, general and administrative

64,245



38,184



175,842



105,681


     Amortization of intangible assets

14,758



10,221



40,695



29,600


           Total operating expenses

114,888



73,668



317,150



205,485










OPERATING INCOME

93,273



59,829



257,020



111,214


     Interest expense, net

15,436



10,507



41,195



31,820


 Income before income taxes

77,837



49,322



215,825



79,394


     Income taxes

20,440



11,986



51,930



20,157


NET INCOME

$

57,397



$

37,336



$

163,895



$

59,237










BASIC NET INCOME PER COMMON SHARE

$

2.52



$

1.65



$

7.18



$

2.60


DILUTED NET INCOME PER COMMON SHARE

$

2.45



$

1.62



$

7.01



$

2.57










Weighted average shares outstanding - Basic

22,789



22,674



22,826



22,784


Weighted average shares outstanding - Diluted

23,403



23,072



23,375



23,088


 

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)










As of

(thousands)

September 26, 2021


December 31, 2020

ASSETS




Current Assets




     Cash and cash equivalents

$

44,882



$

44,767


     Trade receivables, net

292,932



132,505


     Inventories

485,766



312,809


     Prepaid expenses and other

39,205



37,982


           Total current assets

862,785



528,063


 Property, plant and equipment, net

309,170



251,493


 Operating lease right-of-use assets

142,719



117,816


 Goodwill and intangible assets, net

1,036,995



852,076


 Other non-current assets

6,789



3,987


          TOTAL ASSETS

$

2,358,458



$

1,753,435






LIABILITIES AND SHAREHOLDERS' EQUITY




Current Liabilities




     Current maturities of long-term debt

$

7,500



$

7,500


     Current operating lease liabilities

36,955



30,901


     Accounts payable

219,153



105,786


     Accrued liabilities

145,865



83,202


         Total current liabilities

409,473



227,389


 Long-term debt, less current maturities, net

1,077,664



810,907


 Long-term operating lease liabilities

107,753



88,175


 Deferred tax liabilities, net

49,344



39,516


 Other long-term liabilities

22,176



28,007


          TOTAL LIABILITIES

1,666,410



1,193,994






 SHAREHOLDERS' EQUITY




 Common stock

195,402



180,892


 Additional paid-in-capital

23,981



24,387


 Accumulated other comprehensive loss

(3,024)



(6,052)


 Retained earnings

475,689



360,214


          TOTAL SHAREHOLDERS' EQUITY

692,048



559,441


          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,358,458



$

1,753,435


 

PATRICK INDUSTRIES, INC. 

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 




Nine Months Ended

(thousands)

September 26,


September 27,


2021


2020

CASH FLOWS FROM OPERATING ACTIVITIES




 Net income

$

163,895



$

59,237


Depreciation and amortization

76,298



52,955


Stock-based compensation expense

17,307



11,177


Amortization of convertible notes debt discount

5,528



5,302


Other adjustments to reconcile net income to net cash provided by operating activities

8,184



(536)


Change in operating assets and liabilities, net of acquisitions of businesses

(123,795)



(15,377)


Net cash provided by operating activities

147,417



112,758


CASH FLOWS FROM INVESTING ACTIVITIES




Capital expenditures

(44,155)



(22,159)


  Business acquisitions and other investing activities

(299,561)



(123,265)


Net cash used in investing activities

(343,716)



(145,424)


NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES

196,414



(44,377)


Increase (decrease) in cash and cash equivalents

115



(77,043)


Cash and cash equivalents at beginning of year

44,767



139,390


Cash and cash equivalents at end of period

$

44,882



$

62,347


 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/patrick-industries-inc-reports-third-quarter-2021-financial-results-301410930.html

SOURCE Patrick Industries, Inc.

FAQ

What were Patrick Industries' financial results for Q3 2021?

In Q3 2021, Patrick Industries reported net sales of $1.1 billion, a 51% increase from Q3 2020, with net income of $57.4 million.

What drove the revenue growth for PATK in the third quarter?

Revenue growth was driven by strong performance in the RV and marine markets, along with housing and industrial sectors.

How did the operating income of PATK change in Q3 2021?

Operating income for Q3 2021 increased by 56% to $93.3 million compared to the same quarter last year.

What acquisitions did Patrick Industries make recently?

Recently, Patrick Industries acquired Coyote Manufacturing and Tumacs Covers to expand its marine portfolio.

What is the outlook for Patrick Industries in 2022?

The company expects continued strong trends and visibility into 2022, supported by high retail demand for leisure lifestyle products.

Patrick Industries Inc

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Furnishings, Fixtures & Appliances
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