Patrick Industries, Inc. Reports First Quarter 2024 Financial Results
First Quarter 2024 Highlights (compared to First Quarter 2023 unless otherwise noted)
- Net sales increased 4% to
$933 million driven by a 15% increase in RV revenue, a 5% increase in housing revenue, and acquisitions, which together more than offset lower marine revenue. - As previously announced, Patrick completed the acquisition of
Sportech, LLC , a supplier of high-value component solutions to the powersports industry onJanuary 24th , representing the Company's largest acquisition to date. - Operating margin increased 20 basis points to 6.4%. Excluding acquisition transaction costs and purchase accounting adjustments in both periods, adjusted operating margin increased 70 basis points year-over-year.
- Net income increased 16% to
$35 million compared to$30 million in the first quarter of 2023. Diluted earnings per share of$1.59 increased 18% compared to$1.35 for the first quarter of 2023. - Excluding acquisition transaction costs and purchase accounting adjustments in both periods, adjusted diluted earnings per share increased 31% to
$1.79 . - Adjusted EBITDA increased 14% to
$111 million ; adjusted EBITDA margin increased 110 basis points to 11.9%. - Cash flow provided by operations was
$35 million in the first quarter compared to cash used in operations of$1 million in the same period last year. On a trailing twelve-month basis, operating cash flow through the first quarter of 2024 was$445 million , an increase of 3% compared to$434 million through the first quarter of 2023. - Maintained solid balance sheet and liquidity position, with net leverage at 2.8x, which reflects the acquisition of Sportech in January, helping to ensure ability to capitalize on potential future opportunities.
Net sales increased 4% to
Operating income of
Net income increased 16% to
Excluding acquisition transaction costs and purchase accounting adjustments in both periods, adjusted net income increased 29% to
"Patrick returned to growth in the first quarter as a result of our disciplined operating management, market share growth, and strategic acquisition and diversification strategy," said
First Quarter 2024 Revenue by Market Sector
(co
mpared to First Quarter 2023 unless otherwise noted)
RV (45% of Revenue)
- Revenue of
$421 million increased 15% while wholesale RV industry unit shipments increased 9%. - Content per wholesale RV unit (on a trailing twelve-month basis) decreased 9% to
$4,859 . Compared to the fourth quarter of 2023, content per wholesale RV unit (on a trailing twelve-month basis) increased 1%, representing the first sequential increase in content per unit since the first quarter of 2023.
Marine (17% of Revenue)
- Revenue of
$155 million decreased 35% while estimated wholesale powerboat industry unit shipments decreased 34%. Powersports revenue was previously included in our Marine end market. 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 9% to
$4,049 . Compared to the fourth quarter of 2023, estimated content per wholesale powerboat unit (on a trailing twelve-month basis) decreased less than 1%.
Powersports (9% of Revenue)
- Revenue of
$83 million increased 152%, driven primarily by the acquisition of Sportech.
Housing (29% of Revenue, comprised of
- Revenue of
$275 million increased 5%; estimated wholesale MH industry unit shipments increased 13%; total housing starts increased 1%. - Estimated MH content per wholesale MH unit (on a trailing twelve-month basis) increased 1% to
$6,422 . Compared to the fourth quarter of 2023, estimated content per wholesale MH unit (on a trailing twelve-month basis) increased 1%.
Balance Sheet, Cash Flow and Capital Allocation
For the first three months of 2024, cash provided by operations was
We remained disciplined in allocating and deploying capital, returning approximately
Our total debt at the end of the first quarter was approximately
Business Outlook and Summary
"Our team continues to execute on our business objectives, including providing innovative product solutions, generating long-term profitable growth, maintaining a strong financial foundation, and our goal of providing a best-in-class customer experience delivering value for all stakeholders," continued Mr. Nemeth. "We are poised and ready to meet the opportunities and challenges that may present themselves this year, as evidenced by our solid performance over the last two years despite the headwinds we faced in our markets. The RV and MH markets returned to year-over-year wholesale shipment growth in the first quarter and we believe our marine end market will begin to stabilize in the back half of 2024. We have a number of product innovations in development which will also help drive further organic growth. Our job is to remain operationally and financially agile, ready to support our customers in any environment. As Patrick enters its 65th year as a company, we remain optimistic about the future and see positive long-term trends within the Outdoor Enthusiast and Housing markets we serve, with numerous profitable organic and strategic growth opportunities available to the Company in the future."
Conference Call Webcast
About
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
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, marine and powersports 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 to include 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, including, but not limited to, uncertainties surrounding the Company's further investment and initiatives in the powersports market; 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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First Quarter Ended |
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($ in thousands, except per share data) |
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|
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$ 933,492 |
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$ 900,100 |
Cost of goods sold |
|
728,637 |
|
705,856 |
GROSS PROFIT |
|
204,855 |
|
194,244 |
Operating Expenses: |
|
|
|
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Warehouse and delivery |
|
37,449 |
|
35,845 |
Selling, general and administrative |
|
85,246 |
|
82,401 |
Amortization of intangible assets |
|
22,818 |
|
19,764 |
Total operating expenses |
|
145,513 |
|
138,010 |
OPERATING INCOME |
|
59,342 |
|
56,234 |
Interest expense, net |
|
20,090 |
|
18,484 |
Income before income taxes |
|
39,252 |
|
37,750 |
Income taxes |
|
4,159 |
|
7,577 |
NET INCOME |
|
$ 35,093 |
|
$ 30,173 |
BASIC EARNINGS PER COMMON SHARE |
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$ 1.62 |
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$ 1.40 |
DILUTED EARNINGS PER COMMON SHARE |
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$ 1.59 |
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$ 1.35 |
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|
|
|
|
Weighted average shares outstanding - basic |
|
21,653 |
|
21,591 |
Weighted average shares outstanding - diluted |
|
22,080 |
|
22,512 |
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
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As of |
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($ in thousands) |
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ASSETS |
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Current Assets |
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|
|
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Cash and cash equivalents |
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$ 17,610 |
|
$ 11,409 |
Trade receivables, net |
|
278,337 |
|
163,838 |
Inventories |
|
514,543 |
|
510,133 |
Prepaid expenses and other |
|
48,884 |
|
49,251 |
Total current assets |
|
859,374 |
|
734,631 |
Property, plant and equipment, net |
|
371,128 |
|
353,625 |
Operating lease right-of-use assets |
|
190,507 |
|
177,717 |
Goodwill and intangible assets, net |
|
1,604,482 |
|
1,288,546 |
Other non-current assets |
|
7,385 |
|
7,929 |
TOTAL ASSETS |
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$ 3,032,876 |
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$ 2,562,448 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities |
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Current maturities of long-term debt |
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$ 7,500 |
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$ 7,500 |
Current operating lease liabilities |
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51,839 |
|
48,761 |
Accounts payable |
|
196,747 |
|
140,524 |
Accrued liabilities |
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104,456 |
|
111,711 |
Total current liabilities |
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360,542 |
|
308,496 |
Long-term debt, less current maturities, net |
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1,392,099 |
|
1,018,356 |
Long-term operating lease liabilities |
|
142,799 |
|
132,444 |
Deferred tax liabilities, net |
|
67,903 |
|
46,724 |
Other long-term liabilities |
|
10,997 |
|
11,091 |
TOTAL LIABILITIES |
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1,974,340 |
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1,517,111 |
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TOTAL SHAREHOLDERS' EQUITY |
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1,058,536 |
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$ 1,045,337 |
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
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$ 3,032,876 |
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$ 2,562,448 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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First Quarter Ended |
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($ in thousands) |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income |
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$ 35,093 |
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$ 30,173 |
Depreciation and amortization |
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40,335 |
|
35,510 |
Stock-based compensation expense |
|
5,460 |
|
5,242 |
Other adjustments to reconcile net income to net cash |
|
853 |
|
2,056 |
Change in operating assets and liabilities, net of acquisitions |
|
(46,565) |
|
(73,931) |
Net cash provided by (used in) operating activities |
|
35,176 |
|
(950) |
CASH FLOWS FROM INVESTING ACTIVITIES |
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|
|
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Purchases of property, plant and equipment |
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(15,495) |
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(20,266) |
Business acquisitions and other investing activities |
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(355,229) |
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(3,311) |
Net cash used in investing activities |
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(370,724) |
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(23,577) |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES |
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341,749 |
|
32,463 |
Net increase in cash and cash equivalents |
|
6,201 |
|
7,936 |
Cash and cash equivalents at beginning of year |
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11,409 |
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22,847 |
Cash and cash equivalents at end of period |
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$ 17,610 |
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$ 30,783 |
Earnings Per Common Share (Unaudited) |
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The table below illustrates the calculation for earnings per common share: |
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First Quarter Ended |
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($ in thousands, except per share data) |
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Numerator: |
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Earnings for basic earnings per common share calculation |
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$ 35,093 |
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$ 30,173 |
Effect of interest on potentially dilutive convertible notes, net of tax |
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— |
|
162 |
Earnings for diluted earnings per common share calculation |
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$ 35,093 |
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$ 30,335 |
Denominator: |
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Weighted average common shares outstanding - basic |
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21,653 |
|
21,591 |
Weighted average impact of potentially dilutive convertible notes |
|
205 |
|
658 |
Weighted average impact of potentially dilutive securities |
|
222 |
|
263 |
Weighted average common shares outstanding - diluted |
|
22,080 |
|
22,512 |
Earnings per common share: |
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|
|
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Basic earnings per common share |
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$ 1.62 |
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$ 1.40 |
Diluted earnings per common share |
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$ 1.59 |
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$ 1.35 |
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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First Quarter Ended |
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($ in thousands) |
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Net income |
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$ 35,093 |
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$ 30,173 |
+ Depreciation & amortization |
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40,335 |
|
35,510 |
+ Interest expense, net |
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20,090 |
|
18,484 |
+ Income taxes |
|
4,159 |
|
7,577 |
EBITDA |
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99,677 |
|
91,744 |
+ Stock-based compensation |
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5,460 |
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5,242 |
+ Acquisition related transaction costs |
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4,998 |
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— |
+ Acquisition related fair-value inventory step-up |
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822 |
|
610 |
- Gain on sale of property, plant and equipment |
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(14) |
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(23) |
Adjusted EBITDA |
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$ 110,943 |
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$ 97,573 |
The following table reconciles cash flow from operations to free cash flow on a trailing twelve-month basis: |
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Trailing Twelve Months Ended |
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($ in thousands) |
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Cash flow from operations |
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$ 444,798 |
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$ 433,827 |
Less: purchases of property, plant and equipment |
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(54,216) |
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(81,481) |
Free cash flow |
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$ 390,582 |
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$ 352,346 |
The following table reconciles operating margin to adjusted operating margin: |
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First Quarter Ended |
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Operating margin |
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6.4 % |
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6.2 % |
Acquisition-related fair-value inventory step-up |
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0.1 % |
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0.1 % |
Transaction costs |
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0.5 % |
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— % |
Adjusted operating margin |
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7.0 % |
|
6.3 % |
The following table reconciles net income to adjusted net income and diluted earnings per common share to |
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First Quarter Ended |
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($ in thousands, except per share data) |
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Net income |
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$ 35,093 |
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$ 30,173 |
+ Acquisition-related fair-value inventory step-up |
|
822 |
|
610 |
+ Transaction costs |
|
4,998 |
|
— |
- Tax impact of adjustments |
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(1,488) |
|
(122) |
Adjusted net income |
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$ 39,425 |
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$ 30,661 |
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Diluted earnings per common share (as reported) |
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$ 1.59 |
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$ 1.35 |
Transaction costs, net of tax |
|
0.17 |
|
— |
Acquisition related fair-value inventory step-up, net of tax |
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0.03 |
|
0.02 |
Adjusted diluted earnings per common share |
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$ 1.79 |
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$ 1.37 |
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