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Patrick Industries, Inc. Reports First Quarter 2021 Financial Results

First 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 /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, 2021


March 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 - Diluted

23,286



23,267


 

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)










As of

(thousands)

March 28, 2021


December 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 activities

1,595



750


  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


 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/patrick-industries-inc-reports-first-quarter-2021-financial-results-301280218.html

SOURCE Patrick Industries, Inc.

Julie Ann Kotowski, Investor Relations, kotowskj@patrickind.com, 574.294.7511