Patrick Industries, Inc. Reports Fourth Quarter and Full Year 2020 Financial Results
Patrick Industries, Inc., a major manufacturer and distributor of component and building products for the recreational vehicle (“RV”), marine, manufactured housing (“MH”), and industrial markets, reported financial results for the fourth quarter and full year ended December 31, 2020.
Net sales in the fourth quarter of 2020 increased $223.1 million, or 41%, to $772.6 million from $549.5 million in the fourth quarter of 2019. The consolidated net sales increase was due to growth across all market sectors, led by the RV and marine markets.
Operating income of $62.2 million increased $26.2 million, or 73%, compared to $36.0 million in the fourth quarter of 2019. Operating margin of 8.0% in the fourth quarter of 2020 increased 150 basis points compared to 6.5% in the same period a year ago.
Net income of $37.8 million increased $17.8 million, or 89%, compared to $20.0 million in the fourth quarter of 2019. Diluted earnings per share of $1.64 for the fourth quarter of 2020 increased $0.78, or 91%, compared to $0.86 for the fourth quarter of 2019.
“Momentum and tailwinds supporting both retail and wholesale shipments in the recreational vehicle and boating markets remained strong through the fourth quarter as outdoor recreation has seen significant growth in popularity during the COVID-19 pandemic, reinforcing our view of the attractiveness and resilience of our leisure lifestyle markets,” said Andy Nemeth, President and Chief Executive Officer. “The size, scale and flexibility of our operating and financial platform allowed us to execute strategically and tactically during the quarter, and leverage our fixed cost structure to drive increased profitability during this period of strong demand. We continued to accelerate capital investments in our infrastructure, including automation and capacity expansion, which will allow us to flex our operations in this dynamic environment, and we reinforced our investments in human capital initiatives to develop, retain and enhance the well-being of our team members. We further expanded our product offerings and presence in the marine OEM market and aftermarket with the acquisitions of Geremarie and its state-of-the-art, highly automated operations as well as the innovative and creative Taco Metals in the fourth quarter of 2020.”
Fourth Quarter 2020 Revenue by Market Sector
(all metrics compared to Fourth Quarter 2019 unless otherwise noted)
RV (58% of Revenue)
Revenue of $446.7 million increased 52% while wholesale RV industry unit shipments increased 35%
Full year content per wholesale RV unit for 2020 increased 2% to $3,235
Marine (14% of Revenue)
Revenue of $108.1 million increased 48% while estimated wholesale powerboat industry unit shipments increased 7%
Full year estimated content per wholesale powerboat unit for 2020 increased 24% to $2,098
MH (16% of Revenue)
Revenue of $121.9 million increased 9% while wholesale MH industry unit shipments increased 2%
Full year content per wholesale MH unit for 2020 decreased 1% to $4,580
Industrial (12% of Revenue)
Revenue of $95.9 million increased 35% while housing starts increased 12%
“The continued surge of new buyers into the outdoor recreation space has created tremendous opportunities for the RV and marine industries to provide new products and experiences to consumers, further improving the long-term outlook of our leisure lifestyle markets,” said Mr. Nemeth. “Our industrial and MH markets are also ideally suited for value added lifestyle enrichment as well as fundamental housing and home improvement, and we are actively partnering with our customers to provide premium quality and innovative solutions to support their production and product differentiation needs.”
Full Year 2020 Results
Despite COVID-19-related operating disruptions in the first and second quarters of 2020, net sales of $2,486.6 million for the full year 2020 increased $149.5 million, or 6%, from $2,337.1 million in 2019, primarily reflecting significant increases in wholesale and retail demand in our leisure lifestyle markets in the second half of 2020. As previously disclosed, the Company temporarily suspended operations at certain of its facilities from late March through early May 2020 as a result of production shutdowns by certain OEM customers in response to the COVID-19 pandemic.
Full year 2020 operating income of $173.4 million increased $19.0 million, or 12%, compared to $154.4 million in 2019. Operating margin of 7.0% improved 40 basis points versus 6.6% a year ago. Net income of $97.1 million increased 8% compared to $89.6 million in 2019. Diluted earnings per share of $4.20 increased 9% compared to $3.85 a year ago.
Balance Sheet, Cash Flow and Capital Allocation
Operating cash flow for the fourth quarter of 2020 was $47.4 million, a decrease of 33%, from $70.4 million in the fourth quarter of 2019. The decrease was primarily due to the timing of accounts receivable collections and an increase in inventory purchases to proactively support the increased production needs of our OEM customers. Inventories increased $58.9 million year over year and we collected an additional $12 million of receivables within two days of December 31, 2020 compared to 2019. Full year 2020 operating cash flow of $160.2 million decreased 17% compared to the prior year as we built working capital to support end market growth. We invested $186.3 million in business acquisitions in the fourth quarter of 2020 to expand our product offerings and geographic presence within the marine end market. For the full year 2020, business acquisitions in RV, marine and industrial markets totaled approximately $306 million. Capital expenditures in the fourth quarter of 2020 totaled $9.9 million, compared to $5.5 million in the fourth quarter of 2019, due primarily to our efforts to automate and expand production capacity.
In alignment with our capital allocation strategy, we returned $6.4 million to shareholders in the form of dividends in the fourth quarter of 2020, with 2020 dividends totaling $23.6 million. We also repurchased 50,700 shares for a total of $2.8 million during the fourth quarter of 2020 and 595,805 shares for $23.1 million in full year 2020.
Our net debt at the end of the quarter was approximately $795 million, resulting in a net leverage ratio of 2.44x (as calculated in accordance with our credit agreement). Available liquidity, comprised of borrowing availability under our credit facility and $45 million of cash on hand, was approximately $315 million, with no major debt maturities until 2023.
Business Outlook and Summary
“The proactive investments we made in 2020 to further align our business model with the anticipated growth in all our end markets in 2021 and beyond have positioned us to remain flexible and nimble to continue to execute our disciplined capital allocation and growth strategy,” said Mr. Nemeth. “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 past year 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.”
For the full fourth quarter results, click here.
About Patrick Industries, Inc.
Patrick Industries, Inc. is a major manufacturer and distributor of component products and building products serving the recreational vehicle, 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, China and the Netherlands. 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, aluminum 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, and other miscellaneous products, in addition to providing transportation and logistics services.
Julie Ann Kotowski – Investor Relations – firstname.lastname@example.org – (574) 294-7511
Source: Patrick Industries, Inc.