PR Newswire | Apr 29, 2021 08:15AM EDT

04/29 07:15 CDT

Patrick Industries, Inc. Reports First Quarter 2021 Financial ResultsFirst Quarter 2021 Highlights (all metrics compared to First Quarter 2020 unless otherwise noted)- Net sales of $850.5 million increased 44%, driven by strong demand across all market sectors- Operating income of $68.5 million increased 74%- Operating margin of 8.1% increased 140 basis points- Net income of $47.5 million increased 124%- Diluted earnings per share of $2.04 increased 124%- Operating cash flows of $50.3 million increased 281%- Completed acquisition of Sea-Dog Corporation- Subsequent to quarter end, completed acquisition of SeaDek, $350 million notes offering due 2029 and credit facility expansion and extension ELKHART, Ind., April 29, 2021

ELKHART, Ind., April 29, 2021 /PRNewswire/ -- Patrick Industries, Inc. (NASDAQ: PATK), a major manufacturer and distributor of component and building products for the recreational vehicle ("RV"), marine, manufactured housing ("MH"), and industrial markets, today reported financial results for the first quarter ended March 28, 2021.

Net sales in the first quarter of 2021 increased $261.3 million, or 44%, to $850.5 million from $589.2 million in the first quarter of 2020. The consolidated net sales increase was due to growth across all market sectors, led by the RV and marine markets.

Operating income of $68.5 million increased $29.2 million, or 74%, compared to $39.3 million in the first quarter of 2020. Operating margin of 8.1% in the first quarter of 2021 increased 140 basis points compared to 6.7% in the same period a year ago.

Net income of $47.5 million increased $26.3 million, or 124%, compared to $21.2 million in the first quarter of 2020. Diluted earnings per share of $2.04 for the first quarter of 2021 increased $1.13, or 124%, compared to $0.91 for the first quarter of 2020. First quarter 2021 net income and diluted earnings per share reflect an income tax benefit of $5.7 million and $0.24, respectively, related to the exercise and vesting of share-based payment awards.

"Momentum in our leisure lifestyle markets accelerated during the quarter, as the strength of both retail and wholesale shipments in the recreational vehicle and boating markets materially improved year over year," said Andy Nemeth, President and Chief Executive Officer. "The demand for outdoor recreation remains solid, in alignment with our view of the tremendous attractiveness and potential of RV and marine markets. The size, scale and flexibility of our operating and financial platform allowed us to execute strategically and tactically during the quarter, while leveraging our fixed cost structure to drive increased profitability. We completed the acquisition of Sea-Dog in the first quarter and also focused on investments in our human capital initiatives, to enhance the well-being of, and environment for, our team members. The spirit of our team members in combination with their dedication and can-do attitude has led us forward as we strive to exceed our customers' expectations and production objectives."

First Quarter 2021 Revenue by Market Sector(all metrics compared to First Quarter 2020 unless otherwise noted)

RV (59% of Revenue)

* Revenue of $501.4 million increased 57% while wholesale RV industry unit shipments increased 48% * Content per wholesale RV unit (on a trailing twelve-month basis) increased 6% to $3,288

Marine(16% of Revenue)

* Revenue of $136.8 million increased 75% while estimated wholesale powerboat industry unit shipments increased 14% * Estimated content per wholesale powerboat unit (on a trailing twelve-month basis) increased 44% to $2,426

MH (14% of Revenue)

* Revenue of $120.8 million increased 8% while estimated wholesale MH industry unit shipments decreased 2% * Estimated content per wholesale MH unit (on a trailing twelve-month basis) increased 3% to $4,691

Industrial (11% of Revenue)

* Revenue of $91.5 million increased 16% while housing starts increased 10%

"OEM production levels in the RV and marine industries remain strong, capitalizing on interest in outdoor recreation activities that provide adventure, family togetherness and social-distancing," said Mr. Nemeth. "As housing, repair and remodel, and home improvement market conditions also remain robust, we believe that our industrial and MH-focused businesses are ideally positioned to meet the increasing demand. These trends in leisure lifestyle consumer preferences and activities as well as accelerating urban-to-less-dense migration patterns, coupled with persistent tightness in housing inventory, all provide strong tailwinds for Patrick and our primary end markets, further solidifying an already promising long-term outlook."

Balance Sheet, Cash Flow and Capital Allocation

Operating cash flow for the first quarter of 2021 was $50.3 million, an increase of 281%, from $13.2 million in the first quarter of 2020. We invested $29.5 million in business acquisitions in the first quarter of 2021 to expand our product offerings and geographic presence within the marine and RV end markets, including the previously announced acquisition of Sea-Dog. Subsequent to the end of the first quarter, we completed the acquisition of Hyperform Inc., which operates under the SeaDek brand name in the marine OEM market and aftermarket. Capital expenditures in the first quarter of 2021 totaled $14.2 million, compared to $7.6 million in the first quarter of 2020, as we continue to automate and expand production capacity.

In alignment with our capital allocation strategy, we returned $6.6 million to shareholders in the form of dividends in the first quarter of 2021.

Our net debt at the end of the quarter was approximately $807 million, resulting in a net leverage ratio of 2.3x (as calculated in accordance with our credit agreement). Available liquidity, comprised of borrowing availability under our credit facility and cash on hand, was approximately $303 million, with no major debt maturities until 2023. As previously announced, subsequent to the end of the first quarter, we completed the issuance of $350 million of 4.75% senior notes due 2029, increased the capacity of our senior secured credit facility to $700 million and extended the maturity of the credit facility to April 2026.

Business Outlook and Summary

"Our teams have been actively working with our customers during this dynamic period to support their needs, and proactive inventory management and investment in our infrastructure have allowed us to move with our customers and partner in their growth across all end markets this quarter. Looking forward to the remainder of 2021, we will continue to position ourselves in alignment with our customers' demand and remain flexible and nimble in our operations as we execute our disciplined capital allocation and growth strategy," said Mr. Nemeth. "As always, our team's health and safety will continue to remain paramount in our efforts and priorities, and their inspiring dedication and outstanding performance during this quarter have energized and strengthened our commitment to strive for the highest level of internal and external customer service. Additionally, we remain committed to serving our communities, stakeholders, and partners, and driving overall shareholder value."

Conference Call Webcast

As previously announced, Patrick Industries will host an online webcast of its first quarter 2021 earnings conference call that can be accessed on the Company's website, www.patrickind.com, under "Investor Relations," on Thursday, April 29, 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 "Investor Relations - Presentations."

About Patrick Industries, Inc.

Patrick Industries, Inc. is a major manufacturer and distributor of component products and building products serving the recreational vehicle, marine, manufactured housing, residential housing, high-rise, hospitality, kitchen cabinet, office and household furniture, fixtures and commercial furnishings, and other industrial markets and operates coast-to-coast in various locations throughout the United States and in Canada and China. Patrick's major manufactured products include decorative vinyl and paper laminated panels, countertops, fabricated aluminum products, wrapped profile mouldings, slide-out trim and fascia, cabinet doors and components, hardwood furniture, fiberglass bath fixtures and tile systems, thermoformed shower surrounds, specialty bath and closet building products, fiberglass and plastic helm systems and component products, wiring and wire harnesses, boat covers, towers, tops and frames, electrical systems components including instrument and dash panels, softwoods lumber, interior passage doors, air handling products, RV painting, slotwall panels and components, fuel tanks, and CNC molds and composite parts and other products. The Company also distributes drywall and drywall finishing products, electronics and audio systems components, wiring, electrical and plumbing products, appliances, cement siding, raw and processed lumber, FRP products, interior passage doors, roofing products, tile, laminate and ceramic flooring, shower doors, furniture, fireplaces and surrounds, interior and exterior lighting products, various marine aftermarket products, and other miscellaneous products, in addition to providing transportation and logistics services.

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. You should not consider these metrics in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP. We calculate marine content per unit based on estimated wholesale powerboat unit shipments, which we believe better represents the relationship between our sales and marine OEM production, rather than based on estimated retail powerboat unit sales.

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)





First Quarter Ended

(thousands except per share data) March 28, 2021March 29, 2020



NET SALES $850,483 $589,232

Cost of goods sold 688,951 479,751

GROSS PROFIT 161,532 109,481



Operating Expenses:

Warehouse and delivery 29,913 24,732

Selling, general and administrative 51,232 35,869

Amortization of intangible assets 11,906 9,601

Total operating expenses 93,051 70,202



OPERATING INCOME 68,481 39,279

Interest expense, net 11,179 10,492

Income before income taxes 57,302 28,787

Income taxes 9,789 7,600

NET INCOME $47,513 $21,187



BASIC NET INCOME PER COMMON SHARE $2.09 $0.92

DILUTED NET INCOME PER COMMON SHARE $2.04 $0.91



Weighted average shares outstanding - Basic 22,737 23,016

Weighted average shares outstanding - Diluted23,286 23,267

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)





As of

(thousands) March 28, 2021December 31, 2020

ASSETS

Current Assets

Cash and cash equivalents $ 6,171 $44,767

Trade receivables, net 211,974 132,505

Inventories 345,244 312,809

Prepaid expenses and other 28,446 37,982

Total current assets 591,835 528,063

Property, plant and equipment, net 256,213 251,493

Operating lease right-of-use assets 124,384 117,816

Goodwill and intangible assets, net 856,651 852,076

Deferred financing costs, net 2,220 2,382

Other non-current assets 3,575 1,605

TOTAL ASSETS $ 1,834,878 $1,753,435



LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Current maturities of long-term debt $ 7,500 $7,500

Current operating lease liabilities 32,513 30,901

Accounts payable 154,291 105,786

Accrued liabilities 105,545 83,202

Total current liabilities 299,849 227,389

Long-term debt, less current maturities, net 785,849 810,907

Long-term operating lease liabilities 93,327 88,175

Deferred tax liabilities, net 40,998 39,516

Other long-term liabilities 19,580 28,007

TOTAL LIABILITIES 1,239,603 1,193,994



SHAREHOLDERS' EQUITY

Common stock 174,920 180,892

Additional paid-in-capital 24,387 24,387

Accumulated other comprehensive loss (5,136) (6,052)

Retained earnings 401,104 360,214

TOTAL SHAREHOLDERS' EQUITY 595,275 559,441

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$ 1,834,878 $1,753,435

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)



First Quarter Ended

(thousands) March 28,March 29,

2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $47,513$21,187

Depreciation and amortization 22,521 17,175

Stock-based compensation expense 4,298 4,311

Amortization of convertible notes debt discount 1,769 1,723

Other adjustments to reconcile net income to net cash provided by operating 1,595 750 activities

Change in operating assets and liabilities, net of acquisitions of businesses (27,404)(31,982)

Net cash provided by operating activities 50,292 13,164

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures (14,239)(7,580)

Business acquisitions and other investing activities (30,806)(24,260)

Net cash used in investing activities (45,045)(31,840)

NET CASH FLOWS USED IN FINANCING ACTIVITIES (43,843)(26,191)

Decrease in cash and cash equivalents (38,596)(44,867)

Cash and cash equivalents at beginning of year 44,767 139,390

Cash and cash equivalents at end of period $6,171 $94,523

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SOURCE Patrick Industries, Inc.