Patrick Industries, Inc. Reports First Quarter 2022 Financial Results

Patrick Industries, Inc. (“Patrick” or the “Company”), a leading component solutions provider for the RV, marine, manufactured housing (“MH”) and industrial markets today reported financial results for the first quarter ended March 27, 2022.

First Quarter 2022 Highlights (compared to First Quarter 2021 unless otherwise noted)

• Net sales of $1.3 billion increased 58%, reflecting momentum in all end markets and contribution from 2021 acquisitions
• Gross profit of $295 million increased 83%
• Gross margin of 22.0% increased 300 basis points
• Operating income of $162 million increased 136%
• Operating margin of 12.1% increased 400 basis points
• Net income of $113 million increased 137%
• Diluted earnings per share of $4.54 increased 123%, including $0.39 dilutive impact of accounting treatment for convertible notes per new standard
• Acquisition of Rockford Corporation and the Rockford Fosgate® brand

Net sales in the first quarter of 2022 increased $491.7 million, or 58%, to $1.3 billion from $850.5 million in the first quarter of 2021. The increase reflects continued strong performance in our RV and marine leisure lifestyle markets as well as our MH and industrial end markets, market share gains, and the impact of acquisitions completed in 2021.

Operating income of $161.8 million increased $93.3 million, or 136%, from $68.5 million in the first quarter of 2021. Operating margin of 12.1% in the first quarter of 2022 increased 400 basis points compared to 8.1% in the same period a year ago, driven principally by the realization of productivity improvements and labor efficiencies, increased throughput and leverage of the fixed cost structure, and the contribution of acquisitions.

Net income was $112.7 million, an increase of 137% compared to $47.5 million in the first quarter of 2021. Diluted earnings per share was $4.54, an increase of 123% compared to $2.04 for the first quarter of 2021.

In the first quarter of 2022, the Company adopted a new accounting standard that requires its 1.00% convertible notes due 2023 to be presented on an “if converted” basis in the calculation of diluted earnings per share. As a result of the adoption of this standard, the Company’s first quarter 2022 diluted earnings per share was reduced by $0.39. Prior year results were not affected by the new accounting standard. The Company does not intend to issue shares in settlement of convertible notes that may be converted by their holders.

“We are pleased with our first quarter performance as our team continued to execute on driving efficiencies with improved scheduling and more consistent material procurement on the back of strong production levels across all of our end markets,” said Andy Nemeth, Chief Executive Officer. “Although supply chain visibility remains challenging with certain products, the dedication our team put forth over the past twelve months to coordinate our efforts across our brands and operations and provide better procurement stability are taking hold to drive improved service and reliability for our customers.”

Jeff Rodino, President, said, “In March, we welcomed Rockford Corporation and the Rockford Fosgate® brand into the Patrick family, which represents our strategic expansion of our platform to the powersports market and related aftermarket. Additionally during the quarter, we achieved substantial rewards from our investment of over $100 million in capital expenditures over the last 21 months, as our automation and technology initiatives are helping us best leverage our labor resources, thus improving our gross and operating margins.”

First Quarter 2022 Revenue by Market Sector
(compared to First Quarter 2021 unless otherwise noted)

RV (61% of Revenue)

• Revenue of $820.6 million increased 64% while wholesale RV industry unit shipments increased 15%
• Content per wholesale RV unit (on a trailing twelve-month basis) increased 33% to $4,370

Marine (16% of Revenue)

• Revenue of $221.0 million increased 62% while estimated wholesale powerboat industry unit shipments remained relatively flat
• Estimated content per wholesale powerboat unit (on a trailing twelve-month basis) increased 73% to $4,113

MH (13% of Revenue)

• Revenue of $173.6 million increased 44% while estimated wholesale MH industry unit shipments increased 11%
• Estimated content per wholesale MH unit (on a trailing twelve-month basis) increased 19% to $5,501

Industrial (10% of Revenue)

• Revenue of $127.0 million increased 39% while housing starts increased 10%

Cash used in operations for the first quarter of 2022 was $23.0 million, compared to cash provided by operations of $50.3 million in the first quarter of 2021, reflecting continued investment in working capital in order to meet customer needs and mitigate potential supply-chain constraints. Business acquisitions in the first quarter of 2022 totaled $131.6 million, primarily related to our acquisition of the Rockford Corporation. Capital expenditures in the first quarter of 2022 totaled $18.7 million, compared to $14.2 million in the first quarter of 2021, reflecting continued 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 $33.1 million to shareholders in the first quarter of 2022, including $24.8 million through opportunistic repurchases of approximately 365,600 shares and $8.3 million of dividends.

Our total debt at the end of the quarter was approximately $1.5 billion, resulting in a net total 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 $319 million.

“We are continuing to leverage our resources, capacity, capital investments, and acquisition strategy to enhance our operating platform and position our business to better serve our customers,” continued Mr. Nemeth. “Consumer demand remains strong despite inflation and rising interest rates, RV dealer inventories are better calibrated versus a year ago, and marine, MH, and overall housing inventories remain lean with extended channel refill runway. We remain focused on driving automation and innovation initiatives which are producing the anticipated results, and we expect our financial performance to continue to benefit from these investments throughout the year. Focus, discipline, and return continue to characterize the way we look at capital allocation to drive value over the long-term horizon for our customers, team members, partners, communities and shareholders.”

For the full first quarter results, click here.

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 across the United States.

Source: Patrick Industries, Inc.