Patrick Industries Inc. (NASDAQ: PATK), a major manufacturer and distributor of component and building products for the RV, marine, manufactured housing (MH) and industrial markets, today (April 29) 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,” Andy Nemeth, president and chief executive officer, stated in a release. “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,” stated 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 the company’s 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, Patrick 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 the company continues to automate and expand production capacity.
In alignment with the company’s capital allocation strategy, Patrick returned $6.6 million to shareholders in the form of dividends in the first quarter of 2021.
Patrick’s 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 its 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, Patrick completed the issuance of $350 million of 4.75% senior notes due 2029, increased the capacity of the company’s 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 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,” at 10 a.m. Eastern time today (April 29). 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 RV, 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.