• Revenue: $919 million, a 6% increase in Q3 2024.
• Net Income: $41 million, a 3% increase in Q3 2024.
• Earnings Per Diluted Share (EPS): $1.80, including $0.06 dilution from convertible notes.
• Adjusted EBITDA: $121 million, a 7% increase.
• Adjusted EBITDA Margin: 13.2%, up 10 basis points.
• Gross Margin: 23.1%, up 10 basis points.
• SG&A Expenses: $76 million, a 7% increase.
• Operating Income: $74 million, a 5% increase.
• Operating Margin: 8.1%, down 10 basis points.
• Cash Provided by Operations: $224 million for the first nine months of 2024.
• Capital Expenditures: Estimated $70 million to $75 million for 2024.
• Net Leverage: 2.6 times at the end of Q3 2024.
• Total Net Liquidity: $458 million at the end of Q3 2024.
• RV Revenue: $396 million, up 1% in Q3 2024.
• Marine Revenue: $136 million, down 21% in Q3 2024.
• Powersports Revenue: $87 million, representing 10% of consolidated sales.
• Housing Revenue: $300 million, up 13% in Q3 2024.
• Available Liquidity Post-Refinancing: Approximately $755 million.
• Dividend Payments: $12 million returned to shareholders in Q3 2024.

• Warning! GuruFocus has detected 6 Warning Sign with PATK.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Patrick Industries Inc (NASDAQ:PATK) reported a 6% increase in topline growth for the third quarter, resulting in approximately $919 million in revenue.
• The company demonstrated resilience through strategic diversification, M&A activities, and prudent cost management.
• Patrick Industries Inc (NASDAQ:PATK) maintained strong operational performance and resilient margins despite challenging market conditions.
• The acquisition of RecPro is expected to significantly enhance the company's aftermarket platform and synergies with marine and powersports brands.
• The company ended the quarter with a strong balance sheet, including $755 million in pro forma liquidity, following refinancing activities.

Negative Points

• Marine revenues declined by 21% from the prior year, reflecting challenges in the marine market.
• The company anticipates reduced production levels in the fourth quarter, which may lead to short-term inefficiencies and operating margin erosion.
• Powersports revenue is expected to decline 10% to 20% sequentially from the third quarter due to OEMs focusing on reducing dealer inventories.
• The RV market is experiencing a shift towards smaller, entry-level units, impacting content per unit and potentially affecting revenue.
• Interest rate sensitivity and recent weather challenges have impacted consumer purchasing patterns, affecting demand recovery.

Q & A Highlights

Q: Can you discuss the expected sequential decline in powersports for the fourth quarter and expectations for RV and Marine markets? A: Andrew Nemeth, CEO, explained that OEMs are maintaining strict inventory discipline across all markets, including RV, Marine, and powersports. They anticipate reduced production levels in Q4 but expect a restock when retail demand inflects.

Q: How does the RecPro acquisition position Patrick Industries in the aftermarket, and what cushion does it provide if market softness continues? A: Andrew Nemeth, CEO, stated that RecPro provides a strong aftermarket platform, allowing for organic growth across existing product categories. Jeff Rodino, President, RV, added that they are actively pursuing opportunities in three areas: consumer-focused brand growth, OEM product introductions, and leveraging RecPro's distribution platform.

Q: What contributed to the 6% revenue growth in the quarter, and how did M&A impact it? A: Andrew Roeder, CFO, noted that acquisitions drove the growth, with M&A contributing 9% year-over-year. Organic growth was up 1%, with pricing down 2% and content share up 3%.

Q: Regarding the RV market, why is there no anticipated restock in the 2025 outlook despite low dealer inventories? A: Andrew Nemeth, CEO, explained that while they expect a need for restock, they are being cautious in their forecasts. They assume current weeks on hand will remain, but they are prepared to adjust if retail demand increases.

Q: Can you elaborate on the decline in marine content per unit and what needs to be done to show growth? A: Andrew Nemeth, CEO, attributed the decline to mix-related factors, as they are more heavily skewed towards higher-engineered product lines. They are optimistic about organic growth through new product innovations and expect content to increase with a shift back to larger units.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.