Core Insights - Patrick Industries, Inc. is a leading component solutions provider for the RV, Marine, Powersports, and Housing markets, emphasizing a customer-focused approach and innovation [3]. Company Participation in Conferences - The company will participate in three investor conferences in March 2025, including the Raymond James 46th Annual Institutional Investors Conference, Bank of America's Consumer and Retail Conference, and the 37th Annual Roth Conference [1][6]. Company Overview - Founded in 1959, Patrick Industries has over 85 leading brands and employs approximately 10,000 skilled team members across the United States, focusing on quality and customer service [3].

Core Insights - Patrick Industries, Inc. has completed the acquisition of Medallion Instrumentation Systems, LLC, enhancing its capabilities in customized instrumentation and vehicle electronics for various markets [1][2] - Medallion generated approximately $38 million in revenue in 2024, indicating a solid financial foundation for the acquisition [1] Company Overview - Patrick Industries is a leading component solutions provider serving the RV, Marine, Powersports, and Housing markets, with a history dating back to 1959 [4] - The company employs around 10,000 skilled team members across the United States and is committed to quality, customer service, and innovation [4] Strategic Implications - The acquisition aligns with Patrick's mission to provide full-solutions packages, particularly in response to growing customer preferences for digital switching and custom displays in the Outdoor Enthusiast space [2] - Medallion will continue to operate under its existing brand name, allowing for a seamless integration while leveraging Patrick's resources to expand in underpenetrated markets [2]

Market Trends - The marine market has seen a decline in consumer demand, particularly in the powerboat sector, with OEM production decreasing further in 2024 due to economic uncertainties, leading to a 25% decrease in marine wholesale unit shipments compared to 2023 [31][33]. - Total U.S. retail expenditures on boats, engines, accessories, and related costs fell by 2.6% to $57.7 billion in 2023 compared to 2022 [32]. - The powersports segment, reported separately starting Q1 2024, focuses on utility and premium segments, with the company optimistic about future growth despite current market challenges [35][36]. - The manufactured housing (MH) industry saw wholesale unit shipments increase to approximately 103,300 units in 2024, up from 89,200 units in 2023, indicating growth potential driven by various demographic trends [39]. - New housing starts decreased by approximately 4% in 2024, with single-family starts increasing by 6% while multifamily starts decreased by 25% [44]. Acquisitions and Investments - The company completed acquisitions totaling approximately $418 million in 2024 and approximately $696 million over the last three years, focusing on strategic growth in primary markets [47][46]. - The company invested $76 million in property, plant, and equipment in 2024 to enhance manufacturing automation and upgrade production equipment [50]. Customer and Sales Information - As of December 31, 2024, the company had approximately 4,500 active customers, with sales to major RV manufacturers Forest River and Thor accounting for 29% of consolidated net sales in 2024 [56]. - The company has experienced seasonal sales trends, with the highest sales typically in the second quarter and lowest in the fourth quarter [67]. Financial Obligations and Risks - The company’s total debt obligations as of December 31, 2024, were $223.4 million, with a potential additional annual interest cost of approximately $2.2 million for a 100-basis point increase in SOFR rates [237]. - The company is exposed to commodity price volatility, particularly for key raw materials, which may affect pricing strategies [238]. - The company’s 1.75% Convertible Notes are subject to market risk, with their fair value increasing or decreasing based on the common stock price [239]. Human Capital Management - The company has implemented various human capital management programs, including free assistance programs for mental health and tuition reimbursement [70]. - The company’s investment in human capital resources focuses on ensuring the well-being and success of its team members [69]. - The company’s leadership development programs aim to foster an inclusive culture and retain highly qualified team members [72]. - The company has a commitment to safety and well-being in the production environment, including OSHA preparedness and ergonomic assessments [70]. - As of December 31, 2024, the company had approximately 10,000 team members, with 80% being hourly employees [68]. - The company has a diverse executive team with extensive experience across various markets, including RV, marine, and powersports [74]. Research and Development - The company’s research and development efforts aim to maintain leadership in core products and develop new technological capabilities and applications [55]. - The company maintains a balanced inventory level with expected OEM production, continually exploring alternative sources for raw materials [60].

Financial Data and Key Metrics Changes - For Q4 2024, the company reported sales growth of 8%, totaling $846 million [12] - Full year 2024 sales increased by 7% to $3.7 billion, with adjusted net income per diluted share at $4.34 [13][37] - Gross margin for Q4 was 22.1%, down from 22.9% in the prior year, while full year gross margin was 22.5% compared to 22.6% in 2023 [33] - Operating income for Q4 was $40 million, with an operating margin of 4.7%, while full year operating income was $258 million with a margin of 6.9% [36] Business Line Data and Key Metrics Changes - RV revenues increased 1% to $358 million in Q4, representing 42% of consolidated sales, with RV content per unit up 1% year-over-year [20][31] - Marine revenues decreased to $122 million in Q4, down from $147 million in the same quarter of 2023, reflecting a decline in higher engineered categories [24] - Powersports revenues surged 189% to $78 million in Q4, driven by resilience in the utility segment [26][31] - Housing revenues rose 12% to $288 million in Q4, with manufactured housing content per unit increasing 4% [29][31] Market Data and Key Metrics Changes - Dealer inventories for RV and Marine declined approximately 13% and 22% respectively during 2024, indicating disciplined inventory management [18] - Retail registrations for RV increased approximately 1% in Q4, marking the first quarter of improvement in 13 quarters [21] - The housing market showed solid demand for affordable housing, exceeding expectations, particularly in manufactured housing [19][29] Company Strategy and Development Direction - The company expanded its presence in the Powersport space through acquisitions, enhancing its aftermarket capabilities [7][11] - A focus on organic growth targets of 2% to 3% annually through innovative products and a strong customer relationship strategy [10] - The company aims to leverage its diversified model and flexible cost structure to maintain profitability and prepare for future market upcycles [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving consumer purchasing power and confidence, which could lead to increased demand in 2025 [15] - The company anticipates that its end-markets are at or near cyclical lows and expects a return to growth over the long term [11] - Management highlighted the importance of monitoring key indicators such as consumer sentiment and dealer activity to shape demand trends [49] Other Important Information - The company completed a debt refinancing to improve liquidity and reduce fixed-rate debt costs [9] - Total net liquidity at the end of 2024 was approximately $804 million, providing flexibility for strategic opportunities [43] - The company plans to maintain a disciplined capital allocation strategy, prioritizing strategic acquisitions while returning cash to shareholders [44] Q&A Session Summary Question: 2025 outlook and changes from previous discussions - Management noted no significant changes to the 2025 outlook, with building optimism and tailwinds observed [57] Question: Breakdown of 8% growth - The 8% growth was driven by 11% acquisition revenue, with organic growth at 2% [61] Question: Opportunities for organic growth - Management highlighted new product opportunities and increased content share as key drivers for organic growth [65] Question: Expectations for Q1 revenue and margins - Q1 is expected to be relatively flat compared to Q4, with a slight increase anticipated [72] Question: Capital allocation and M&A pipeline - The M&A pipeline remains full, with management expressing excitement about cash flow generation and capital allocation [78] Question: Cash flow in Q4 and raw materials procurement - The company procured raw materials primarily in the RV sector, anticipating increased activity in Q1 [82] Question: RV mix expectations for 2025 - The RV mix is expected to remain similar in Q1, with potential for improvement later in the year [86] Question: Operating margin improvement drivers - The expected margin improvement is primarily volume-driven, with no significant overhead increases anticipated [90] Question: RecPro acquisition updates - The RecPro acquisition has been successful, with over 60 new products added to the platform [94] Question: Retail activity and dealer orders post-RV show season - There is optimism regarding retail activity, with some production uptick observed [100] Question: Competitive environment changes - No significant changes in competition have been noted, with the company focusing on innovation to stay ahead [138]

Group 1: Earnings Performance - Patrick Industries reported quarterly earnings of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.50 per share, but down from $0.99 per share a year ago, representing an earnings surprise of 4% [1] - The company posted revenues of $846.12 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.06%, compared to year-ago revenues of $781.19 million [2] - Over the last four quarters, Patrick Industries has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Patrick Industries shares have increased approximately 17.6% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.94 on revenues of $941.5 million, and for the current fiscal year, it is $5.38 on revenues of $3.95 billion [7] Group 3: Industry Context - The Building Products - Mobile Homes and RV Builders industry is currently ranked in the top 21% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The Zacks Rank for Patrick Industries is currently 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6]

Financial Performance - Fourth quarter net sales increased 8% to $846 million compared to $781 million in Q4 2023, driven by a 12% improvement in Housing end market revenue and acquisitions[4] - Operating income decreased 31% to $40 million, with an operating margin of 4.7%, down 260 basis points year-over-year; adjusted operating margin was 5.2%[5] - Net income for Q4 2024 was $15 million, or $0.42 per diluted share, compared to $31 million, or $0.94 per diluted share in Q4 2023; adjusted diluted EPS was $0.52[5] - Full year 2024 net sales reached $3.7 billion, a 7% increase from 2023, with adjusted EBITDA of $452 million, up 6%[10] - Net income for the year ended December 31, 2024, was $138,401, a slight decrease from $142,897 in 2023[21] - Basic earnings per share for the fourth quarter of 2024 was $0.45, down from $0.96 in the fourth quarter of 2023[21] - For the year ended December 31, 2024, net income was $138,401 thousand, slightly down from $142,897 thousand in 2023, with adjusted net income increasing to $146,242 thousand from $143,418 thousand[34] Cash Flow and Dividends - Free cash flow for 2024 was $251 million, with $55 million returned to shareholders through dividends and share repurchases[11] - Free cash flow for the year ended December 31, 2024, was $251,159, down from $349,685 in 2023[33] - The company reported a net cash provided by operating activities of $326,841 for the year ended December 31, 2024, compared to $408,672 in 2023[33] - The company declared a quarterly cash dividend of $0.40 per share, payable on March 3, 2025[14] Acquisitions and Market Presence - The company completed two key acquisitions in 2024: Sportech, LLC and RecPro, enhancing its presence in the Powersports and Outdoor Enthusiast markets[6] - Looking ahead, the company is optimistic about growth opportunities in the Outdoor Enthusiast space and plans to invest in inventory in anticipation of increased RV demand in 2025[13] - Revenue from the RV sector accounted for 42% of total revenue, with a 3% increase in wholesale RV industry unit shipments[7] Debt and Assets - Total debt at the end of Q4 2024 was approximately $1.3 billion, with a net leverage ratio of 2.7x; available liquidity was around $804 million[12] - Total assets increased to $3,020,954 as of December 31, 2024, compared to $2,562,448 in 2023[24] - Total current liabilities increased to $353,615 in 2024 from $308,496 in 2023[24] - The company’s goodwill and intangible assets increased to $1,600,125 in 2024, up from $1,288,546 in 2023, indicating potential growth through acquisitions[24] Profitability Metrics - Gross profit for the year ended December 31, 2024, was $835,890, up from $782,233 in 2023, reflecting a gross margin improvement[21] - Operating income for the fourth quarter of 2024 decreased to $39,592, down 30.9% from $57,316 in the same quarter of 2023[21] - Operating margin for Q4 2024 decreased to 4.7% from 7.3% in Q4 2023, while the adjusted operating margin was 5.2% compared to 7.3% in the previous year[34] - The adjusted operating margin for the year ended December 31, 2024, was 7.2%, slightly down from 7.5% in 2023[34] Other Financial Adjustments - The company incurred transaction costs of $4,998 thousand for the year ended December 31, 2024, which were not present in the previous year[34] - The loss on extinguishment of debt contributed $2,549 thousand to both the fourth quarter and the year ended December 31, 2024, with no such loss reported in the previous year[34] - The company reported a fair-value inventory step-up of $2,166 thousand for Q4 2024, compared to $87 thousand in Q4 2023[34] - The tax impact of adjustments for the year ended December 31, 2024, was $(2,694) thousand, compared to $(176) thousand in 2023[34] - The company experienced a three-for-two stock split on December 13, 2024, affecting the prior year periods' earnings per share calculations[34]

Fourth Quarter and Full Year 2024 Highlights (compared to Fourth Quarter and Full Year 2023 unless otherwise noted) Net sales for the fourth quarter and full year increased 8% to $846 million and 7% to $3.7 billion, respectively, reflecting the contribution of acquisitions, and higher revenue from our Housing and RV end markets. Operating margin for the fourth quarter and full year was 4.7% and 6.9%, respectively. Adjusted operating margin1 for the fourth quarter and full year was 5.2% and 7.2%, respectivel ...

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ELKHART, Ind., Feb. 3, 2025 /PRNewswire/ -- Patrick Industries, Inc. (NASDAQ: PATK) ("Patrick" or the "Company") announced today that it has completed the acquisition of Elkhart, Indiana-based Elkhart Composites, Inc., a Thor Industries owned company. Marketing its products under the "Elkboard" brand name, Elkhart Composites manufactures composite products for sidewalls and ceilings, which are durable, lightweight, sustainable alternatives to wood products, for sale to Thor branded companies and other exte ...

The market expects Patrick Industries (PATK) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be ...