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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

                                                            

FORM 8-K


CURRENT REPORT
Pursuant To Section 13 OR 15(d) Of The Securities Exchange Act Of 1934

Date of report (Date of earliest event reported)
October 31, 2024
PATRICK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Indiana000-0392235-1057796
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification Number)

107 W. Franklin Street
Elkhart,Indiana46516(574)294-7511
(Address of Principal Executive Offices)(Zip Code)Registrant's Telephone Number, including area code
(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
 Common Stock, no par value PATKNASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).            Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨



Item 2.02     Results of Operations and Financial Condition
On October 31, 2024, the Company issued a press release announcing operating results for the third quarter ended September 29, 2024. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
Item 7.01     Regulation FD Disclosure
The information referenced in this Form 8-K is furnished pursuant to Item 7.01, “Regulation FD Disclosure.” Such information, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
(a) Slides for Earnings Presentation as contained in Exhibit 99.2
Item 9.01     Financial Statements and Exhibits
(d)    Exhibits
Exhibit 99.1 - Press Release issued October 31, 2024
Exhibit 99.2 - Slides for Earnings Presentation
Exhibit 104 - Cover Page Interactive Date File (embedded within the Inline XBRL document)



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PATRICK INDUSTRIES, INC.
(Registrant)


Date: October 31, 2024  By:
/s/ Andrew C. Roeder
Andrew C. Roeder
Executive Vice President - Finance, Chief Financial Officer, and Treasurer



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News Release
Patrick Industries, Inc. Reports Third Quarter 2024 Financial Results
Third Quarter 2024 Highlights (compared to Third Quarter 2023 unless otherwise noted)
•Net sales increased 6% to $919 million driven by a 13% increase in Housing revenue and our first quarter acquisition of Sportech, which together more than offset a 21% decline in Marine revenue.
•Operating margin decreased 10 basis points to 8.1%. For the first nine months of 2024, adjusted operating margin improved 20 basis points to 7.8%.
•Net income increased 3% to $41 million. Diluted earnings per share of $1.80 included the dilutive impact of our convertible notes and related warrants in the period, or an estimated $0.06 per share. For the first nine months of 2024, adjusted diluted earnings per share increased 13% to $5.75.
•Adjusted EBITDA increased 7% to $121 million; adjusted EBITDA margin increased 10 basis points to 13.2%.
•Cash flow provided by operating activities was $224 million for the first nine months of the year compared to $294 million in the same period last year. Free cash flow, on a trailing twelve-month basis, was $277 million.
•Completed the acquisition of RecPro, which significantly increases our penetration into the RV aftermarket, while also providing synergy opportunity for our Marine and Powersports end markets to sell through a more advanced aftermarket distribution channel.
•Maintained solid balance sheet and liquidity position, ending the third quarter with a total net leverage ratio of 2.6x following the acquisition of RecPro and liquidity of $458 million.
•Subsequent to quarter end, the Company amended and extended the maturity of its credit facility, and also issued $500 million aggregate principal amount of 6.375% Senior Notes due 2032. The Company plans to redeem its 7.500% Senior Notes due 2027 with a portion of the proceeds.
•Patrick plans to host an investor day in New York City on December 3, 2024.

ELKHART, IN, October 31, 2024 – Patrick Industries, Inc. (NASDAQ: PATK) ("Patrick" or the "Company"), a leading component solutions provider for the Outdoor Enthusiast and Housing markets, today reported financial results for the third quarter and nine months ended September 29, 2024.

Net sales increased 6% to $919 million, an increase of $53 million compared to the third quarter of 2023. The growth in net sales was due to a 13% increase in Housing revenue coupled with revenue gains from our Sportech acquisition, which closed in January of this year. These factors more than offset a 21% decline in Marine revenue as marine OEMs as well as OEMs across our other Outdoor Enthusiast markets continued to maintain highly disciplined production schedules in an effort to manage dealer inventory in alignment with current end market demand.
Operating income of $74 million in the third quarter of 2024 increased $3 million, or 5%, compared to $71 million in the third quarter of 2023. Operating margin of 8.1% decreased 10 basis points compared to 8.2% in the same period a year ago, reflecting higher SG&A expenses and amortization costs related to acquisitions. For the first nine months of 2024 compared to the same period in 2023, excluding acquisition transaction costs and purchase accounting adjustments in both periods, adjusted operating margin improved 20 basis points to 7.8%.

Net income increased 3% to $41 million, compared to $40 million in the third quarter of 2023. Diluted earnings per share of $1.80 in the third quarter of 2024 included approximately $0.06 of dilution from our convertible notes and related warrants. There was no dilutive impact from the convertible notes in the third quarter of 2023. For the first nine months of 2024 compared to the first nine months of 2023, excluding acquisition transaction costs and purchase accounting adjustments in both periods, adjusted net income increased 14% to $128 million and adjusted diluted earnings per share increased 13% to $5.75. Diluted earnings per share for the first nine months of 2024 included approximately $0.10 of dilution from our 2028 convertible notes and
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related warrants. The prior year period included approximately $0.05 of dilution related to our 1.00% Convertible Senior Notes due 2023, which were repaid in cash in February 2023.

"The Patrick team delivered another quarter of solid results with revenue and net income growth supported by the continued diversification of our business," said Andy Nemeth, Chief Executive Officer. "The resilience of our model is directly related to the dedication and talent of our incredible team members, and the strategic investments we have made enabling Patrick to perform well during a prolonged period of inventory destocking that has continued to affect our Outdoor Enthusiast end markets at different times over the last two years."

Jeff Rodino, President — RV, said, "This quarter, we welcomed RecPro into our family of brands, which meaningfully expands our position in the direct-to-consumer RV and enthusiast aftermarket. We are energized by the depth and breadth of their product offering, the synergies across our business, and their tremendous leadership and expertise in e-commerce and aftermarket sales. We believe RecPro's efficient distribution channel and significant consumer reach will substantially enhance our ability to provide Patrick's valuable aftermarket solutions across all of our end markets."

Third Quarter 2024 Revenue by Market Sector (compared to Third Quarter 2023 unless otherwise noted)
RV (43% of Revenue)
•Revenue of $396 million decreased 1% while wholesale RV industry unit shipments increased 6%.
•Content per wholesale RV unit (on a trailing twelve-month basis) decreased by 1% to $4,887. Compared to the second quarter of 2024, content per wholesale RV unit (on a trailing twelve-month basis) decreased 2%.

Marine (15% of Revenue)
•Revenue of $136 million decreased 21% while estimated wholesale powerboat industry unit shipments decreased 23%. Our Marine end market revenue previously included Powersports revenue, which we began to report separately following the Sportech acquisition. End market revenue and content per unit reflect this change for the relevant periods.
•Estimated content per wholesale powerboat unit (on a trailing twelve-month basis) decreased 6% to $3,936. Compared to the second quarter of 2024, estimated content per wholesale powerboat unit (on a trailing twelve-month basis) was flat.

Powersports (10% of Revenue)
•Revenue of $87 million increased 204%, driven primarily by the acquisition of Sportech in the first quarter of 2024.

Housing (32% of Revenue, comprised of Manufactured Housing ("MH") and Industrial)
•Revenue of $300 million increased 13%; estimated wholesale MH industry unit shipments increased 17%; total housing starts decreased 3%.
•Estimated content per wholesale MH unit (on a trailing twelve-month basis) increased 1% to $6,518. Compared to the second quarter of 2024, estimated content per wholesale MH unit increased 1%.

Balance Sheet, Cash Flow and Capital Allocation
For the first nine months of 2024, cash provided by operating activities was $224 million compared to $294 million for the prior year period, with the change primarily driven by investments in working capital. Purchases of property, plant and equipment totaled $18 million in the third quarter of 2024, reflecting maintenance capital expenditures and continued investments in alignment with our automation and technology initiatives. On a trailing twelve-month basis, free cash flow through the third quarter of 2024 was $277 million, compared to $412 million through the third quarter of 2023 when we aggressively monetized working capital in a declining
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sales environment. Our long-term debt increased approximately $70 million during the third quarter of 2024, primarily as the result of the RecPro acquisition, which closed on September 6, 2024.

We remained disciplined in allocating and deploying capital, returning approximately $12 million to shareholders in the third quarter of 2024 through dividends. We remain opportunistic on share repurchases and had $78 million left authorized under our current share repurchase plan at the end of the third quarter.
Our total debt at the end of the third quarter was approximately $1.4 billion, resulting in a total net leverage ratio of 2.6x (as calculated in accordance with our credit agreement). Available liquidity, comprised of borrowing availability under our credit facility and cash on hand, was approximately $458 million.

Subsequent to the end of the quarter, we reduced our cost of debt and increased our liquidity position by issuing $500 million of 6.375% Senior Notes due 2032 and expanding the capacity of our credit facility to $1.0 billion, while extending the maturity date to October 2029. We plan to use a portion of the proceeds from these transactions to redeem our 7.500% Senior Notes on November 7, 2024. Following these transactions, the Company's next major debt maturity will be in 2028.

Business Outlook and Summary
"Our team remains confident in the strength of our brand portfolio, disciplined operating model, earnings power of the business, and the profitable runway of opportunity that exists in each of our primary end markets," continued Mr. Nemeth. "We are intensely focusing on elevating the customer experience, invigorating our team's entrepreneurial spirit, winning additional market share by exceeding customer expectations, and growing the business through accretive acquisitions while strategically allocating capital toward automation and innovation initiatives. Over the last year, the teams at Patrick, in collaboration with our Advanced Product Group, have significantly expanded our product development and prototyping activities as a way to bring next-generation solutions to our customers over the next few years. We are optimistic that a positive demand inflection will occur in 2025, and believe recent interest rate reductions, lower inflation levels and continued solid economic data are important ingredients to bring this recovery to fruition, at which point our business is sized and scaled to pivot in alignment with our customers' needs. We are deeply appreciative of the incredible commitment and dedication of our team members and energized by their efforts and drive each and every day."

Conference Call Webcast
Patrick Industries will host an online webcast of its third quarter 2024 earnings conference call that can be accessed on the Company’s website, www.patrickind.com, under “For Investors,” on Thursday, October 31, 2024 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 (NASDAQ: PATK) is a leading component solutions provider serving the RV, Marine, Powersports and Housing markets. Since 1959, Patrick has empowered manufacturers and outdoor enthusiasts to achieve next-level recreation experiences. Our customer-focused approach brings together design, manufacturing, distribution, and transportation in a full solutions model that defines us as a trusted partner. Patrick is home to more than 85 leading brands, all united by a commitment to quality, customer service, and innovation. Headquartered in Elkhart, IN, Patrick employs approximately 10,000 skilled team members throughout the United States. For more information on Patrick, our brands, and products, please visit www.patrickind.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains certain statements within the meaning of Private Securities Litigation Reform Act of 1995 that are forward-looking in nature. The forward-looking statements are based on current expectations and our actual results may differ materially from those projected in any forward-looking statement. 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. Factors that could cause actual results to differ materially from those in forward-looking statements included in this press release include, without limitation: adverse economic and business conditions, including cyclicality and seasonality in the industries we sell our products; the financial condition of our customers or suppliers; the loss of a significant
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customer; changes in consumer preferences; declines in the level of unit shipments or reduction in growth in the markets we serve; the availability of retail and wholesale financing for RVs, watercraft and powersports products, and residential and manufactured homes; pricing pressures due to competition; costs and availability of raw materials, commodities and energy and transportation; supply chain issues, including financial problems of manufacturers or suppliers and shortages of adequate materials or manufacturing capacity; the challenges and risks associated with doing business internationally; challenges and risks associated with importing products, such as the imposition of duties, tariffs or trade restrictions; the ability to manage our working capital, including inventory and inventory obsolescence; the availability and costs of labor and production facilities and the impact of labor shortages; fuel shortages or high prices for fuel; any interruptions or disruptions in production at one of our key facilities; challenges with integrating acquired businesses; the impact of the consolidation and/or closure of all or part of a manufacturing or distribution facility; an impairment of assets, including goodwill and other long-lived assets; an inability to attract and retain qualified executive officers and key personnel; the effects of union organizing activities; the impact of governmental and environmental regulations, and our inability to comply with them; changes to federal, state, local or certain international tax regulations; unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise; public health emergencies or pandemics, such as the COVID-19 pandemic; our level of indebtedness; our inability to comply with the covenants contained in our senior secured credit facility; an inability to access capital when needed; the settlement or conversion of our notes; fluctuations in the market price for our common stock; an inability of our information technology systems to perform adequately; any disruptions in our business due to an IT failure, a cyber-incident or a data breach; any adverse results from our evaluation of our internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; certain provisions in our Articles of Incorporation and Amended and Restated By-laws that may delay, defer or prevent a change in control; adverse conditions in the insurance markets; and the impact on our business resulting from wars and military conflicts, such as war in Ukraine and evolving conflict in the Middle East.
The Company does not undertake to publicly update or revise any forward-looking statements. Information about certain risks that could affect our business and cause actual results to differ from those express 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, 2023, 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.
Contact:
Steve O'Hara
Vice President of Investor Relations
oharas@patrickind.com
574.294.7511
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PATRICK INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Third Quarter EndedNine Months Ended
($ in thousands, except per share data)September 29, 2024October 1, 2023September 29, 2024October 1, 2023
NET SALES$919,444 $866,073 $2,869,560 $2,686,858 
 Cost of goods sold706,930 666,954 2,220,897 2,083,527 
GROSS PROFIT212,514 199,119 648,663 603,331 
 Operating Expenses:
     Warehouse and delivery37,865 37,664 114,053 109,540 
     Selling, general and administrative75,783 70,873 244,617 231,814 
     Amortization of intangible assets24,449 19,507 71,545 59,093 
           Total operating expenses138,097 128,044 430,215 400,447 
OPERATING INCOME74,417 71,075 218,448 202,884 
     Interest expense, net20,050 16,879 60,483 53,623 
 Income before income taxes54,367 54,196 157,965 149,261 
     Income taxes 13,501 14,646 34,122 37,181 
NET INCOME$40,866 $39,550 $123,843 $112,080 
BASIC EARNINGS PER COMMON SHARE $1.88 $1.84 $5.71 $5.20 
DILUTED EARNINGS PER COMMON SHARE $1.80 $1.81 $5.55 $5.09 
Weighted average shares outstanding - Basic 21,740 21,511 21,706 21,541 
Weighted average shares outstanding - Diluted 22,641 21,884 22,297 22,063 








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PATRICK INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
As of
($ in thousands)September 29, 2024December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents$52,606 $11,409 
Trade and other receivables, net255,369 163,838 
Inventories545,445 510,133 
Prepaid expenses and other59,539 49,251 
Total current assets912,959 734,631 
Property, plant and equipment, net369,342 353,625 
Operating lease right-of-use assets205,110 177,717 
Goodwill and intangible assets, net1,628,358 1,288,546 
Other non-current assets7,184 7,929 
TOTAL ASSETS$3,122,953 $2,562,448 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt$11,250 $7,500 
Current operating lease liabilities53,335 48,761 
Accounts payable189,274 140,524 
Accrued liabilities125,330 111,711 
Total current liabilities379,189 308,496 
Long-term debt, less current maturities, net1,377,727 1,018,356 
Long-term operating lease liabilities156,083 132,444 
Deferred tax liabilities, net68,012 46,724 
Other long-term liabilities 12,461 11,091 
TOTAL LIABILITIES1,993,472 1,517,111 
TOTAL SHAREHOLDERS’ EQUITY1,129,481 1,045,337 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$3,122,953 $2,562,448 


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PATRICK INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
($ in thousands)September 29, 2024October 1, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$123,843 $112,080 
Depreciation and amortization124,002 107,976 
Stock-based compensation expense14,367 13,675 
Other adjustments to reconcile net income to net cash provided by operating activities2,335 4,024 
Change in operating assets and liabilities, net of acquisitions of businesses(40,357)56,075 
Net cash provided by operating activities224,190 293,830 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment(50,264)(47,430)
Business acquisitions and other investing activities (435,137)(28,033)
Net cash used in investing activities(485,401)(75,463)
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES302,408 (224,764)
Net increase (decrease) in cash and cash equivalents41,197 (6,397)
Cash and cash equivalents at beginning of year11,409 22,847 
Cash and cash equivalents at end of period$52,606 $16,450 

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PATRICK INDUSTRIES, INC.
Earnings Per Common Share (Unaudited)

The table below illustrates the calculation for earnings per common share:
 Third Quarter EndedNine Months Ended
($ in thousands, except per share data)September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Numerator:
Earnings for basic earnings per common share calculation$40,866 $39,550 $123,843 $112,080 
Effect of interest on potentially dilutive convertible notes, net of tax— — — 162 
Earnings for diluted earnings per common share calculation$40,866 $39,550 $123,843 $112,242 
Denominator:
Weighted average common shares outstanding - basic21,74021,51121,70621,541
Weighted average impact of potentially dilutive convertible notes554—340221
Weighted average impact of potentially dilutive warrants117—39—
Weighted average impact of potentially dilutive securities230373212301
Weighted average common shares outstanding - diluted22,64121,88422,29722,063
Earnings per common share:
Basic earnings per common share$1.88 $1.84 $5.71 $5.20 
Diluted earnings per common share$1.80 $1.81 $5.55 $5.09 

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PATRICK INDUSTRIES, INC.
Non-GAAP Reconciliation (Unaudited)

Use of Non-GAAP 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, free cash flow, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted net income, adjusted diluted earnings per share (adjusted diluted EPS), adjusted operating margin, adjusted EBITDA margin 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, free cash flow, EBITDA, adjusted EBITDA, adjusted net income, adjusted dilutive EPS, adjusted operating margin, adjusted EBITDA margin and available liquidity may differ from similarly titled measures used by others. Content per unit metrics are generally calculated using our market sales divided by Company estimates based on third-party measures of industry volume. We calculate EBITDA by adding back depreciation and amortization, net interest expense, and income tax expense to net income. We calculate adjusted EBITDA by taking EBITDA and adding back stock-based compensation and loss on sale of property, plant and equipment, acquisition related costs, acquisition-related fair-value inventory step-up adjustments and subtracting out gain on sale of property, plant and equipment. Adjusted net income is calculated by removing the impact of acquisition related transaction costs, net of tax and acquisition-related fair-value inventory step-up adjustments, net of tax. Adjusted diluted EPS is calculated as adjusted net income divided by our weighted average shares outstanding. Adjusted operating margin is calculated by removing the impact of acquisition related transaction costs and acquisition-related fair-value inventory step-up adjustments. We calculate free cash flow by subtracting cash paid for purchases of property, plant and equipment from cash flow from operations. RV wholesale unit shipments are provided by the RV Industry Association. Marine wholesale unit shipments are Company estimates based on data 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.

The following table reconciles net income to EBITDA and adjusted EBITDA:
 Third Quarter EndedNine Months Ended
($ in thousands)September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Net income$40,866 $39,550 $123,843 $112,080 
+ Depreciation & amortization42,186 36,484 124,002 107,976 
+ Interest expense, net20,050 16,879 60,483 53,623 
+ Income taxes13,501 14,646 34,122 37,181 
EBITDA116,603 107,559 342,450 310,860 
+ Stock-based compensation4,625 5,729 14,367 13,675 
+ Acquisition related transaction costs— — 4,998 — 
+ Acquisition related fair-value inventory step-up— — 822 610 
+ (Gain) Loss on sale of property, plant and equipment(34)142 (402)242 
Adjusted EBITDA$121,194 $113,430 $362,235 $325,387 

The following table reconciles cash flow from operations to free cash flow on a trailing twelve-month basis:
 Trailing Twelve Months Ended
($ in thousands)September 29, 2024October 1, 2023
Cash flow from operating activities$339,032 $475,760 
Less: purchases of property, plant and equipment(61,821)(63,876)
Free cash flow$277,211 $411,884 
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The following table reconciles operating margin to adjusted operating margin:
 Third Quarter EndedNine Months Ended
September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Operating margin8.1 %8.2 %7.6 %7.6 %
Acquisition related fair-value inventory step-up— %— %— %— %
Transaction costs— %— %0.2 %— %
Adjusted operating margin8.1 %8.2 %7.8 %7.6 %

The following table reconciles net income to adjusted net income and diluted earnings per common share to adjusted diluted earnings per common share:
 Third Quarter EndedNine Months Ended
($ in thousands, except per share data)September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Net income$40,866 $39,550 $123,843 $112,080 
+ Acquisition related fair-value inventory step-up— — 822 610 
+ Transaction costs— — 4,998 — 
- Tax impact of adjustments— — (1,488)(154)
Adjusted net income$40,866 $39,550 $128,175 $112,536 
Diluted earnings per common share (per above)$1.80 $1.81 $5.55 $5.09 
Transaction costs, net of tax— — 0.17 — 
Acquisition related fair-value inventory step-up, net of tax— — 0.03 0.01 
Adjusted diluted earnings per common share$1.80 $1.81 $5.75 $5.10 
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Q3 2024 Earnings Presentation October 31, 2024

 
Forward-looking statements 2 This presentation includes contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements are generally identified by words such as “estimates,” “guidance,” “expects,” ”anticipates,” “intends,” “plans,” “believes,” “seeks” and similar expressions. Forward-looking statements include information with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, industry projections, growth opportunities, acquisitions, plans and objectives of management, markets for the common stock and other matters. 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. These risks and uncertainties include, in addition to other matters described in this presentation, the impacts of future pandemics, geopolitical tensions or natural disaster, on the overall economy, our sales, customers, operations, team members and suppliers. Further information concerning the Company and its business, including risk factors that potentially could materially affect the Company’s financial results are discussed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024. We caution readers not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and we disclaim any obligation or undertaking to disseminate any updates or revisions to any forward- looking statements contained in this presentation or to reflect any change in our expectations after the date of this presentation or any change in events, conditions or circumstances on which any statement is based. USE OF NON-GAAP FINANCIAL MEASURES This presentation contains non-GAAP financial measures. These measures, the purposes for which management uses them, why management believes they are useful to investors, and a reconciliation to the most directly comparable GAAP financial measures can be found in the Appendix of this presentation. All references to profit measures and earnings per share on a comparable basis exclude items that affect comparability.

 
3 $ in millions, except per share data FY 2019 Q3’24 TTM Δ Wholesale RV Shipments 406,070 331,465 (18)% Total Net Sales $2,337 $3,651 +56% Total RV Sales $1,287 $1,620 +26% Total Marine Sales* $329 $596 +81% Total Housing Sales $721 $1,137 +58% Total Powersports Sales* - $298 NM Gross Margin 18.1% 22.7% +460 bps Adjusted Operating Margin 1 6.6% 7.7% +110 bps Adjusted Diluted EPS 1 $3.86 $7.17 +86% Adjusted EBITDA margin 1 9.3% 12.0% +270 bps Free Cash Flow 1 $165 $277 +68% Diversification Journey Continues Investments aligned with our entrepreneurial vision driving long-term growth Manufactured Housing recovery and Sportech acquisition continued to drive revenue expansion RecPro acquisition significantly increases our aftermarket exposure in RV Maintained solid free cash flow and strong balance sheet while continuing strategic and organic growth investments 1 Non-GAAP metric: Refer to appendix for reconciliation to closest GAAP metric | * In 2019 Powersports sales were included in Marine Sales

 
4 Highlights Q3 2024 Revenue up 6% y/y, driven by ongoing recovery in MH market and acquisitions completed in 2024 • RV revenue down 1%, reflecting the continued shift in demand toward lower-priced units • Marine revenue declined 21% y/y as OEMs worked aggressively to appropriately manage dealer inventory • Powersports revenue grew primarily due to the January 2024 acquisition of Sportech • Housing revenue improved 13% y/y as a result of an estimated 17% y/y increase in MH shipments amid continued solid demand for affordable housing Continued strategic diversification through acquisitions and balanced capital allocation • September acquisition of RecPro meaningfully expands Patrick’s aftermarket presence in RV and offers an established aftermarket platform for our other end markets • Subsequent to the quarter, opportunistically refinanced high-yield notes and amended credit facility, extending maturities and lowering average cost of debt Operating margin reflects our tactical decision to balance the current operating environment and maintain the ability to remain agile as we prepare for a future recovery in our end markets

 
Performance by End Market Q3 2024

 
RV revenue fell 1% y/y as a result of dealers’ desire to carry smaller, less expensive units despite a modest increase in shipments. Dealer inventory levels remain below the historical average, increasing the potential for a future restock. Our Q3’24 acquisition of RecPro significantly expands our presence in the RV aftermarket. 6 $396M REVENUE % OF Q3 SALES 43% WHOLESALE SHIPMENTS 2 CPU1 $4,887 77,800 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 CONTENT PER UNIT 1 1 CPU = Content per wholesale unit for the trailing twelve-month period | 2 Data published by RVIA Q3 2024 MARINE POWERSPORTS HOUSINGRV MARKETS

 
$- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 CONTENT PER UNIT 1,2 7 $136M REVENUE % OF Q3 SALES 15% ESTIMATED WHOLESALE SHIPMENTS 2 ESTIMATED CPU 1,2 $3,936 31,900 1 CPU = Content per wholesale unit for the trailing twelve-month period | 2 Company estimates based on data published by National Marine Manufacturers Association (NMMA) MARINE POWERSPORTS HOUSINGRV MARKETS Q3 2024 OEMs and dealers continue to manage production levels and inventory in a disciplined fashion, evidenced by continued destocking of inventory in the channel. We believe this creates a healthier backdrop for a recovery in demand. Sequential increase

 
We remain well positioned to supply premium component solutions to the Powersports market following the Sportech acquisition. Powersports OEMs are becoming increasingly focused on inventory destocking and tightening production levels. 8 $87M REVENUE % OF Q3 SALES 10% SOLID POWERSPORTS PLATFORM Q3 2024 MARINE POWERSPORTS HOUSINGRV MARKETS $33 $36 $29 $24 $83 $104 $87 QUARTERLY POWERSPORTS NET SALES ($ in millions)

 
$- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 CONTENT PER MH UNIT 1,2 Our Housing businesses continue to support the resilience of our model and diversification strategy. Demand for affordable housing continues to exceed supply. Lower interest rates have the potential to improve housing velocity. 9 $300M REVENUE % OF Q3 SALES 32% ESTIMATED MH WHOLESALE SHIPMENTS 2 ESTIMATED MH CPU 1,2 $6,518 26,500 1CPU = Content per wholesale unit for the trailing twelve-month period | 2 Company estimates based on data published by Manufactured Housing Institute (MHI) MARINE POWERSPORTS HOUSINGRV MARKETS Q3 2024 Sequential increase

 
Q3 2024 POWERSPORTS Utility-focused vehicles have been more resilient than the recreational segment Improved functionality and innovation drive more favorable demand for utility side-by-side vehicles Major OEMs have announced ongoing targeted dealer inventory reduction efforts MARINE Dealers and OEMs remain very disciplined in their efforts to lower inventory levels, with continued progress made in Q3; we now expect further production cuts in Q4’24 Consumer conversion is limited by high-interest rates and inflation RecPro platform provides meaningful opportunity to improve the efficiency of our aftermarket distribution channel in Marine RV RV recovery has been focused on entry-level units given consumers’ desire for smaller, more affordable units RecPro acquisition significantly expands presence in RV aftermarket We now expect OEMs to further limit production in Q4’24 amid dealers’ desire to delay restocking until 2025 HOUSING Interest rate relief has the potential to improve the availability of affordable housing Technological advancements and enhanced materials are improving the quality and efficiency of manufactured homes, increasing the attractiveness to consumers and long-term content growth potential for Patrick Market Sector Trends 10

 
Financial Performance 11 Q3 2024 NET SALES & GROSS MARGIN $919$866 Q3 2023 Q3 2024 23.1%23.0% Powersports Housing Marine RV $71 $74 OPERATING INCOME & MARGIN 8.1%8.2% Q3 2023 Q3 2024 $1.81 $1.80 DILUTED EPS Q3 2023 Q3 2024 YTD ADJUSTED DILUTED EPS 1 Q3 2023 Q3 2024 ($ in millions, except per share data) $5.75 $5.10 YTD ADJUSTED OPERATING MARGIN 1 Q3 2023 Q3 2024 Net sales increased 6% as a result of growth in Housing revenue combined with our January 2024 acquisition of Sportech, which more than offset lower revenue from our other end markets Gross margin was 23.1%, up 10 basis points from the same period last year Operating margin was 8.1%, reflecting lower fixed cost absorption within our Marine businesses and our strategy to match the current environment while maintaining our ability to serve customers at the highest level Net income increased 3% y/y to $41M Diluted EPS of $1.80 includes approximately $0.06 per share of dilution from our convertible notes due 2028 and related warrants as a result of the increase in our stock price Year-to-date adjusted diluted EPS increased 13% to $5.75 For the first nine months of 2024, generated operating cash flow of $224M and free cash flow of $174M 7.8%7.6% NET INCOME Q3 2023 Q3 2024 $41$40 1 Non-GAAP metric: Refer to appendix for reconciliation to closest GAAP metric

 
Shipments and End Market Data1 RETAILWHOLESALE 97,600 77,800 (8)% YoY +6% YoY RV2 RETAILWHOLESALE 45,000 31,900 (8)% YoY (23)% YoY MARINE2 WHOLESALE 26,500 +17% YoY MH2 MULTIFAMILYSINGLE FAMILY 105 259 (11)% YoY (1)% YoY HOUSING STARTS3 73,300 106,100 41,600 49,100 22,800 258 12 Q3 2024 Q3’23 Q3’24 Q3’23 Q3’24 Q3’23 Q3’24 Q3’23 Q3’24 Q3’23 Q3’24 Q3’23 Q3’24Q3’23 Q3’24 1 Due to rounding, numbers presented may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures | 2 Company estimates based on data published by RVIA, NMMA, MHI, and SSI | 3 U.S. Census Bureau Estimated Dealer Inventory Impact in Q3’24: (~19,800) units Estimated Dealer Inventory Impact in Q3’24: (~13,100) units (Units in thousands) 94

 
Balance Sheet and Liquidity 13 COVENANTS AND RATIOS1 DEBT STRUCTURE AND MATURITIES NET LEVERAGE1 ($ in millions) LIQUIDITY ($ in millions) • $150.0M Term Loan ($125.6M o/s), scheduled quarterly installments; balance due August 2027 • $775.0M ($365.0M o/s) Senior Secured Revolver, due August 2027 • $300.0M 7.50% Senior Notes, due October 2027 • $258.8M 1.75% Convertible Senior Notes, due December 2028 • $350.0M 4.75% Senior Notes, due May 2029 Total Debt Outstanding $ 1,399.4 Less: Cash and Debt Paid as Defined by the Credit Agreement (63.2) Net Debt $ 1,336.2 Pro Forma Adj. EBITDA $ 504.7 Net Debt to Pro Forma Adj. EBITDA 2.6x Total Revolver Credit Capacity $ 775.0 Less: Total Revolver Used (including outstanding letters of credit) (370.0) Unused Credit Capacity $ 405.0 Add: Cash on Hand 52.6 Total Available Liquidity $ 457.6 • Consolidated Net Leverage Ratio – 2.6x • Consolidated Secured Net Leverage Ratio – 0.85x versus 2.75x maximum • Consolidated Fixed Charge Coverage Ratio – 3.55x versus minimum 1.50x Strong balance sheet and favorable capital structure to support investments and pursue attractive growth opportunities 1 As defined by credit agreement Q3 2024 Subsequent to the end of the quarter, we reduced our cost of debt and increased our liquidity position by issuing $500 million of 6.375% Senior Notes due 2032 and expanding the capacity of our credit facility to $1.0 billion, while extending the maturity date to October 2029. We plan to use a portion of the proceeds from these transactions to redeem our 7.500% Senior Notes on November 7, 2024. Following these transactions, the Company's next major debt maturity will be in 2028.

 
Adjusted Operating Margin 2 7.5% Down 20 to 30 bps Flat to up 20 bps Operating Cash Flows $409M $370M - $390M $390M - $410M Free Cash Flow $350M $295M+ $310M+ RV Wholesale Unit Shipments (RVIA) 313K 320K - 330K Unchanged RV Retail Unit Shipments3 380K Down 8 - 10% Down 5 – 10% Marine Wholesale Powerboat Unit Shipments3 192K Down 25 - 30% Down 20 - 25% Marine Retail Powerboat Unit Shipments3 179K Down 8 - 10% Down 5 – 10% Powersports Organic Content - Up MSD% Unchanged MH Wholesale Unit Shipments (MHI) 89K Up 15% Up 5 – 10 % New Housing Starts (U.S. Census Bureau) 1.4M Flat Flat to up 5% FY 2023 Actual FY 2024 Estimate 1 Fiscal Year 2024 Outlook 141 Company estimates | 2 2024 operating margin excludes acquisition transaction costs and purchase accounting adjustments | 3 Company estimates based on data published by NMMA and SSI Prior Estimate

 
Appendix

 
Quarterly Revenue by End Market – 2023 1 ($ in millions) Q1 2023 Q2 2023 Q3 2023 Q4 2023 2023 RV $367.0 $383.6 $400.1 $352.7 $1,503.3 Marine $238.0 $226.3 $171.7 $146.6 $782.6 Powersports $32.8 $36.5 $28.8 $23.9 $122.0 Housing $262.4 $274.3 $265.5 $258.0 $1,060.2 Total $900.1 $920.7 $866.1 $781.2 $3,468.0 16 CPU, excluding Powersports 2,3 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Marine $4,433 $4,367 $4,209 $4,069 1 Due to rounding, numbers presented may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures | 2 CPU = Content per wholesale unit for the trailing twelve-month period | 3 Company estimates based on data published by NMMA

 
Non-GAAP Reconciliation 17 RECONCILIATION OF NET INCOME TO EBITDA TO PRO FORMA ADJUSTED EBITDA FOR THE TRAILING TWELVE MONTHS -Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Pro-Forma Adjusted EBITDA, and Net Debt to Pro-Forma Adjusted EBITDA are non- GAAP financial measures. In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non- GAAP operating results adjusted for certain items and other one-time items. -We adjust for the items listed above in all periods presented, unless the impact is clearly immaterial to our financial statements. -We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for comparison to budgeted operating results. We believe the adjusted results are useful to investors because they help them compare our results to prior periods and provide important insights into underlying trends in the business and how management oversees our business operations on a day-to-day basis. -We calculate free cash flow by subtracting cash paid for purchases of property, plant and equipment from cash flow from operations. - Figures may not sum due to rounding. Use of Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. These measures should be considered in addition to, and not as replacements for, the most comparable GAAP measure. ($ in millions) 09/29/2024 Net Income $154.7 + Depreciation & Amortization 160.6 + Interest Expense, net 75.8 + Income Taxes 45.3 EBITDA $436.3 + Stock Compensation Expense 20.1 + Acquisition Pro Forma, transaction-related expenses & other 48.3 Pro Forma Adjusted EBITDA $504.7 RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE FOR THE TRAILING TWELVE MONTHS Q3 2024 TTM 2019 Operating margin 7.6% 6.6% Acquisition related fair-value inventory step-up - - Transaction costs 0.1% - Adjusted operating margin 7.7% 6.6% RECONCILIATION OF ADJUSTED OPERATING MARGIN FOR THE TRAILING TWELVE MONTHS Q3 2024 TTM 2019 Diluted earnings per common share $6.97 $3.85 Transaction costs, net of tax 0.17 0.01 Acquisition related fair-value inventory step-up, net of tax 0.03 - Adjusted diluted earnings per common share $7.17 $3.86

 
($ in millions) 9M 2024 Cash Flows from Operations $224.2 Less: Purchases of Property, Plant and Equipment (50.3) Free Cash Flow $173.9 Non-GAAP Reconciliation (Continued) -Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Pro-Forma Adjusted EBITDA, and Net Debt to Pro-Forma Adjusted EBITDA are non- GAAP financial measures. In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non- GAAP operating results adjusted for certain items and other one-time items. -We adjust for the items listed above in all periods presented, unless the impact is clearly immaterial to our financial statements. -We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for comparison to budgeted operating results. We believe the adjusted results are useful to investors because they help them compare our results to prior periods and provide important insights into underlying trends in the business and how management oversees our business operations on a day-to-day basis. -We calculate free cash flow by subtracting cash paid for purchases of property, plant and equipment from cash flow from operations. - Figures may not sum due to rounding. Use of Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. These measures should be considered in addition to, and not as replacements for, the most comparable GAAP measure. 9M 2024 9M 2023 Diluted earnings per common share $5.55 $5.09 Transaction costs, net of tax 0.17 - Acquisition related fair-value inventory step-up, net of tax 0.03 0.01 Adjusted diluted earnings per common share $5.75 $5.10 RECONCILIATION OF YTD ADJUSTED DILUTED EARNINGS PER COMMON SHARE 18 CALCULATION OF YTD FREE CASH FLOW CALCULATION OF FREE CASH FLOW FOR THE TRAILING TWELVE MONTHS ($ in millions) Q3 2024 TTM 2019 Cash Flow from Operations $339.0 $192.4 Less: Purchases of Property, Plant and Equipment (61.8) (27.7) Free Cash Flow $277.2 $164.7 9M 2024 9M 2023 Operating margin 7.6% 7.6% Acquisition related fair-value inventory step-up - - Transaction costs 0.2% - Adjusted operating margin 7.8% 7.6% RECONCILIATION OF YTD ADJUSTED OPERATING MARGIN

 
Non-GAAP Reconciliation (Continued) -Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Pro-Forma Adjusted EBITDA, and Net Debt to Pro-Forma Adjusted EBITDA are non- GAAP financial measures. In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non- GAAP operating results adjusted for certain items and other one-time items. -We adjust for the items listed above in all periods presented, unless the impact is clearly immaterial to our financial statements. -We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for comparison to budgeted operating results. We believe the adjusted results are useful to investors because they help them compare our results to prior periods and provide important insights into underlying trends in the business and how management oversees our business operations on a day-to-day basis. -We calculate free cash flow by subtracting cash paid for purchases of property, plant and equipment from cash flow from operations. - Figures may not sum due to rounding. Use of Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. These measures should be considered in addition to, and not as replacements for, the most comparable GAAP measure. RECONCILIATION OF TTM ADJUSTED NET INCOME TO EBITDA AND EBITDA MARGIN 19 ($ in millions) Q3 2024 TTM 2019 Net Income $155 $90 + Interest Expense 76 37 + Income Taxes 45 28 + Depreciation & Amortization 161 63 EBITDA $436 $218 Net sales $3,651 $2,337 EBITDA Margin 12.0% 9.3%

 
v3.24.3
Cover Document
Oct. 31, 2024
Document Entity Information [Abstract]  
Entity Central Index Key 0000076605
Document Type 8-K
Document Period End Date Oct. 31, 2024
Entity Registrant Name PATRICK INDUSTRIES, INC.
Entity Incorporation, State or Country Code IN
Entity File Number 000-03922
Entity Tax Identification Number 35-1057796
Entity Address, Address Line One 107 W. Franklin Street
Entity Address, City or Town Elkhart,
Entity Address, State or Province IN
Entity Address, Postal Zip Code 46516
City Area Code (574)
Local Phone Number 294-7511
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, no par value
Trading Symbol PATK
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Flag false
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