Patrick Industries, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results and Declares Quarterly Cash Dividend
Fourth Quarter and Full Year 2023 Highlights (compared to Fourth Quarter 2022 unless otherwise noted)
- Fourth quarter net sales of
$781 million decreased 18% as a result of lower OEM wholesale unit shipments in our end markets and lower pricing passed on to our customers to reflect changes in certain commodity costs. - Fourth quarter and full year 2023 diluted earnings per share (EPS) was
$1.41 and$6.50 , respectively. Fourth quarter and full year 2023 EPS included approximately$0.08 and$0.21 , respectively, of one-time, non-recurring expenses related to tornado damage, severance, and facility consolidations, net of a favorable fair-value measurement adjustment. - Operating margin for the fourth quarter improved 20 basis points to 7.3%, reflecting the continued benefits of our diversification strategy, successful labor management and cost control, and continuous improvement and automation initiatives.
- Achieved full year 2023 operating margin of 7.5%.
- Fourth quarter adjusted EBITDA of
$100 million decreased 8%, while fourth quarter adjusted EBITDA margin increased 140 basis points to 12.8%; full year 2023 adjusted EBITDA of$425 million decreased 34%, while full year 2023 adjusted EBITDA margin decreased 100 basis points to 12.2%. - Inventory reduction of
$158 million from year-end 2022. - Cash provided by operations for full year 2023 was
$409 million versus$412 million for 2022; free cash flow for 2023 was$350 million , an increase of 5% compared to$332 million for 2022. - Repaid
$260 million of debt during the year, resulting in total net leverage of 2.4x and total available liquidity of$780 million at year-end 2023. Returned$61 million to shareholders in 2023 in the form of stock repurchases and dividends. - Completed the acquisition of
Sportech, LLC inJanuary 2024 , representing our largest acquisition to date.
Fourth quarter net sales decreased 18%, to
Operating income of
Net income was
"I am extremely proud of our team's achievements throughout 2023 as they relentlessly focused on driving and delivering strong results in the face of challenging market conditions, with an unwavering commitment to our goal to be the supplier of choice to OEMs in the Outdoor Enthusiast and Housing markets," said
Fourth Quarter 2023 Revenue by Market Sector
(compared to Fourth Quarter 2022 unless otherwise noted)
RV (45% of Revenue)
- Revenue of
$353 million decreased 14% while wholesale RV industry unit shipments decreased 3% - Full year content per wholesale RV unit decreased 9% to
$4,800
Marine (22% of Revenue)
- Revenue of
$174 million decreased 32% while estimated wholesale powerboat industry unit shipments decreased 24% - Full year estimated content per wholesale powerboat unit decreased 5% to
$4,803
Housing (33% of Revenue, comprised of
- Revenue of
$254 million decreased 11%; wholesale MH industry unit shipments decreased 2%; total housing starts increased 2%, with single-family housing starts increasing 22% and multifamily housing starts decreasing 27% - Full year MH content per wholesale MH unit increased 2% to
$6,372
Full Year 2023 Results
Net sales of
Operating income of
Balance Sheet, Cash Flow and Capital Allocation
Cash provided by operations for the full year 2023 was
In alignment with our capital allocation strategy, we returned $19 million to shareholders in the fourth quarter of 2023, consisting of $7 million in opportunistic repurchases of approximately 90,800 shares and $12 million in dividends. For the full year, we repurchased approximately 276,800 shares for a total of $19 million and returned
We repaid long-term debt of approximately
Business Outlook and Summary
"In the face of a challenging environment, our team members demonstrated our BETTER Together values, prioritizing improving our customer service, meeting our customers' needs and managing in alignment with their dynamic production schedules while also focusing on our financial strength through initiatives including debt reduction, prudent working capital and cost management, and realized operational efficiencies," continued
Quarterly Cash Dividend
On
Conference Call Webcast
As previously announced,
About
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 effects of external macroeconomic factors, including adverse developments in world financial markets, disruptions related to tariffs and other trade issues, and global supply chain interruptions; adverse economic and business conditions, including inflationary pressures, cyclicality and seasonality in the industries we sell our products; the effects of interest rate changes and other monetary and market fluctuations; 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; public health emergencies or pandemics, such as the COVID-19 pandemic; the imposition of, or changes in, restrictions and taxes on imports of raw materials and components used in our products; information technology performance and security, including our ability to deter cyberattacks or other information security incidents; 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 manage working capital, including inventory and inventory obsolescence; 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 impact on our business resulting from wars and military conflicts such as war in
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
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
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|
|
|
Fourth Quarter Ended |
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Year Ended |
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($ in thousands, except per share data) |
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
$ 781,187 |
|
$ 951,915 |
|
$ 3,468,045 |
|
$ 4,881,872 |
Cost of goods sold |
602,285 |
|
750,877 |
|
2,685,812 |
|
3,821,934 |
GROSS PROFIT |
178,902 |
|
201,038 |
|
782,233 |
|
1,059,938 |
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
Warehouse and delivery |
34,381 |
|
37,813 |
|
143,921 |
|
163,026 |
Selling, general and administrative |
67,604 |
|
76,544 |
|
299,418 |
|
327,513 |
Amortization of intangible assets |
19,601 |
|
19,054 |
|
78,694 |
|
73,229 |
Total operating expenses |
121,586 |
|
133,411 |
|
522,033 |
|
563,768 |
|
|
|
|
|
|
|
|
OPERATING INCOME |
57,316 |
|
67,627 |
|
260,200 |
|
496,170 |
Interest expense, net |
15,319 |
|
15,770 |
|
68,942 |
|
60,760 |
Income before income taxes |
41,997 |
|
51,857 |
|
191,258 |
|
435,410 |
Income taxes |
11,180 |
|
11,677 |
|
48,361 |
|
107,214 |
NET INCOME |
$ 30,817 |
|
$ 40,180 |
|
$ 142,897 |
|
$ 328,196 |
|
|
|
|
|
|
|
|
BASIC EARNINGS PER COMMON SHARE |
$ 1.44 |
|
$ 1.85 |
|
$ 6.64 |
|
$ 14.82 |
DILUTED EARNINGS PER COMMON SHARE |
$ 1.41 |
|
$ 1.68 |
|
$ 6.50 |
|
$ 13.49 |
|
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|
|
|
|
|
|
Weighted average shares outstanding - Basic |
21,451 |
|
21,771 |
|
21,519 |
|
22,140 |
Weighted average shares outstanding - Diluted |
21,914 |
|
24,191 |
|
22,025 |
|
24,471 |
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
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As of |
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($ in thousands) |
2023 |
|
2022 |
ASSETS |
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|
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Current Assets |
|
|
|
Cash and cash equivalents |
$ 11,409 |
|
$ 22,847 |
Trade receivables, net |
163,838 |
|
172,890 |
Inventories |
510,133 |
|
667,841 |
Prepaid expenses and other |
49,251 |
|
46,326 |
Total current assets |
734,631 |
|
909,904 |
Property, plant and equipment, net |
353,625 |
|
350,572 |
Operating lease right-of-use assets |
177,717 |
|
163,674 |
Goodwill and intangible assets, net |
1,288,546 |
|
1,349,493 |
Other non-current assets |
7,929 |
|
8,828 |
TOTAL ASSETS |
$ 2,562,448 |
|
$ 2,782,471 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities |
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|
Current maturities of long-term debt |
$ 7,500 |
|
$ 7,500 |
Current operating lease liabilities |
48,761 |
|
44,235 |
Accounts payable |
140,524 |
|
142,910 |
Accrued liabilities |
111,711 |
|
172,595 |
Total current liabilities |
308,496 |
|
367,240 |
Long-term debt, less current maturities, net |
1,018,356 |
|
1,276,149 |
Long-term operating lease liabilities |
132,444 |
|
122,471 |
Deferred tax liabilities, net |
46,724 |
|
48,392 |
Other long-term liabilities |
11,091 |
|
13,050 |
TOTAL LIABILITIES |
1,517,111 |
|
1,827,302 |
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|
|
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TOTAL SHAREHOLDERS' EQUITY |
$ 1,045,337 |
|
$ 955,169 |
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|
|
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ 2,562,448 |
|
$ 2,782,471 |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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Year Ended |
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($ in thousands) |
2023 |
|
2022 |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
Net income |
$ 142,897 |
|
$ 328,196 |
Depreciation and amortization |
144,543 |
|
130,757 |
Amortization of convertible notes debt discount |
1,072 |
|
1,851 |
Stock-based compensation expense |
19,429 |
|
21,751 |
Other adjustments to reconcile net income to net cash provided by operating activities |
1,836 |
|
(10,124) |
Change in operating assets and liabilities, net of acquisitions of businesses |
98,895 |
|
(60,693) |
Net cash provided by operating activities |
408,672 |
|
411,738 |
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
Capital expenditures |
(58,987) |
|
(79,883) |
Business acquisitions and other investing activities |
(27,558) |
|
(241,584) |
Net cash used in investing activities |
(86,545) |
|
(321,467) |
NET CASH FLOWS USED IN FINANCING ACTIVITIES |
(333,565) |
|
(190,273) |
Decrease in cash and cash equivalents |
(11,438) |
|
(100,002) |
Cash and cash equivalents at beginning of year |
22,847 |
|
122,849 |
Cash and cash equivalents at end of year |
$ 11,409 |
|
$ 22,847 |
Earnings Per Common Share (Unaudited)
The table below illustrates the calculation for diluted share count which shows the dilutive impact of the adoption of ASU 2020-06 on our 1.00% convertible notes due 2023 as mentioned above:
|
|
Fourth Quarter Ended |
|
Year Ended |
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($ in thousands, except per share data) |
|
2023 |
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2022 |
|
2023 |
|
2022 |
Numerator: |
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|
|
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|
|
|
|
Earnings for basic per share calculation |
|
$ 30,817 |
|
$ 40,180 |
|
$ 142,897 |
|
$ 328,196 |
Effect of interest on potentially dilutive convertible notes, net of tax |
|
— |
|
510 |
|
162 |
|
1,927 |
Earnings for dilutive per share calculation |
|
$ 30,817 |
|
$ 40,690 |
|
$ 143,059 |
|
$ 330,123 |
Denominator: |
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|
|
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|
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Weighted average common shares outstanding - basic |
|
21,451 |
|
21,771 |
|
21,519 |
|
22,140 |
Weighted average impact of potentially dilutive convertible notes |
|
— |
|
2,078 |
|
166 |
|
2,059 |
Weighted average impact of potentially dilutive securities |
|
463 |
|
342 |
|
340 |
|
272 |
Weighted average common shares outstanding - diluted |
|
21,914 |
|
24,191 |
|
22,025 |
|
24,471 |
Earnings per common share: |
|
|
|
|
|
|
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Basic earnings per common share |
|
$ 1.44 |
|
$ 1.85 |
|
$ 6.64 |
|
$ 14.82 |
Diluted earnings per common share |
|
$ 1.41 |
|
$ 1.68 |
|
$ 6.50 |
|
$ 13.49 |
Non-GAAP Reconciliation (Unaudited)
Use of Non-GAAP Financial Metrics
In addition to reporting financial results in accordance with
The following table reconciles net income to EBITDA and Adjusted EBITDA:
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|
Fourth Quarter Ended |
|
Year Ended |
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($ in thousands) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net income |
|
$ 30,817 |
|
$ 40,180 |
|
$ 142,897 |
|
$ 328,196 |
+ Depreciation & amortization |
|
36,567 |
|
34,501 |
|
144,543 |
|
130,757 |
+ Interest expense, net |
|
15,319 |
|
15,770 |
|
68,942 |
|
60,760 |
+ Income taxes |
|
11,180 |
|
11,677 |
|
48,361 |
|
107,214 |
EBITDA |
|
93,883 |
|
102,128 |
|
404,743 |
|
626,927 |
+ Stock based compensation |
|
5,754 |
|
6,155 |
|
19,429 |
|
21,751 |
+ (Gain) loss on sale of property, plant and equipment |
|
343 |
|
153 |
|
585 |
|
(5,560) |
Adjusted EBITDA |
|
$ 99,980 |
|
$ 108,436 |
|
$ 424,757 |
|
$ 643,118 |
The following table reconciles full year cash flow from operations to free cash flow:
|
|
Year Ended |
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($ in thousands) |
|
2023 |
|
2022 |
Cash flow from operations |
|
$ 408,672 |
|
$ 411,738 |
Less: purchases of property, plant and equipment |
|
(58,987) |
|
(79,883) |
Free cash flow |
|
$ 349,685 |
|
$ 331,855 |
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