Patrick Industries, Inc. Reports First Quarter 2014 Financial Results

ELKHART, Ind., May 6, 2014 /PRNewswire/ — Patrick Industries, Inc. (NASDAQ:
PATK), a major manufacturer and distributor of building and component products
for the recreational vehicle (“RV”), manufactured housing (“MH”) and industrial
markets, today reported its financial results for the first quarter ended March
30, 2014.

First Quarter 2014 Financial Results
Net sales for the first quarter of 2014 increased $28.0 million or 19.7%, to
$170.1 million from $142.1 million in the same quarter of 2013. The increase was
primarily attributable to a 21% increase in the Company’s revenue from the RV
industry, which represented approximately 76% of the Company’s first quarter
2014 sales. Sales to the MH industry increased 12%, while sales to the
industrial markets increased 24%. The Company estimates that wholesale unit
shipments to the RV industry increased approximately 11% in the first quarter of
2014 compared to the first quarter of 2013. Additionally, the Company estimates
that wholesale unit shipments to the MH industry, which represented
approximately 13% of first quarter 2014 sales, rose approximately 4% from the
first quarter of 2013. The industrial market sector, which is primarily tied to
the residential housing and commercial and retail fixtures markets, accounted
for 11% of the Company’s first quarter 2014 sales, and reflected an approximate
2% decrease in new housing starts in the first quarter of 2014 compared to the
prior year. The Company estimates that approximately 57% of its industrial
market sales are linked to the residential housing sector and its sales to the
industrial markets generally lag new housing starts by approximately six to nine
months.

Excluding the revenue contributions of acquisitions completed in 2013, the
Company estimates its organic growth in the first quarter of 2014 at
approximately 13%, or $17.5 million of its total revenue increase. The Company
estimates that this organic growth was comprised of growth resulting from market
share gains of approximately 3% and growth tied to overall industry improvement
of approximately 10%. The remaining $10.5 million of the revenue increase in the
first quarter of 2014 was attributable to the incremental contribution of the
2013 acquisitions (including related market share and industry growth),
resulting in incremental growth of approximately 7%.

The Company’s RV content per unit for the first quarter of 2014 increased
approximately 20% to an estimated $1,373 from $1,142 for the first quarter of
2013. The MH content per unit for the first quarter of 2014 increased
approximately 2% to an estimated $1,605 from $1,580 for the same period in 2013.

“We are pleased with our revenues and our operating income performance in the
first quarter of 2014. The severe winter weather we experienced in the Midwest
in early 2014 did cause some additional costs related to production, scheduling,
and delivery inefficiencies, but the impact was not significant to our overall
operating results in the first quarter. We did see a continuing seasonal sales
pickup each month consistent with our expectations and general positive industry
sentiment, and we continue to believe that all three of the primary markets we
serve are well positioned for further growth in 2014,” said Todd Cleveland,
President and Chief Executive Officer.

Patrick reported operating income of $11.8 million in the first quarter of 2014,
an increase of $1.4 million or 13% from the $10.4 million reported in the first
quarter of 2013. First quarter 2014 net income was $6.9 million or $0.64 per
diluted share compared to net income of $6.0 million or $0.55 per diluted share
in the first quarter of 2013.

On February 13, 2014, the Company’s Board of Directors authorized an increase in
the amount of the Company’s stock that may be acquired through the existing
stock repurchase program over the next 12 months to $20.0 million, including
approximately $3.9 million available under the previous authorization. There
were no stock repurchases made during the first quarter ended March 30, 2014. In
the second quarter of 2014 through April 18, 2014, the Company repurchased
16,900 shares at an average price of $40.01 per share for a total cost of
approximately $0.7 million. Since the inception of the stock repurchase program
in February 2013, the Company has repurchased in the aggregate 424,230 shares at
an average price of $15.92 per share for a total cost of approximately $6.8
million.

“We continue to make progress in positioning our business to maximize the
benefits of our strategic initiatives and bring increasing value to our
customers,” said Mr. Cleveland. “We are excited about the opportunities that
exist in our markets and the positive outlook for the industries that we serve.
We look forward to building on our competitive strengths, applying our capital
allocation strategy, and achieving our goal of continually exceeding our
customers’ expectations.”

Conference Call Webcast
As previously announced, Patrick Industries will host an online webcast of its
first quarter 2014 earnings conference call that can be accessed on the
Company’s website, www.patrickind.com under “Investor Relations,” on Thursday,
April 24, 2014, at 10:00 a.m. Eastern time.

About Patrick Industries
Patrick Industries, Inc. (www.patrickind.com) is a major manufacturer of
component products and distributor of building products serving the recreational
vehicle, manufactured housing, kitchen cabinet, office and household furniture,
fixtures and commercial furnishings, marine, and other industrial markets and
operates coast-to-coast through locations in 10 states. Patrick’s major
manufactured products include decorative vinyl and paper laminated panels,
countertops, wrapped profile mouldings, slide out trim and fascia, cabinet doors
and components, hardwood furniture, fiberglass bath fixtures, interior passage
doors, exterior graphics, and slotwall panels and components. The Company also
distributes drywall and drywall finishing products, electronics, wiring,
electrical and plumbing products, cement siding, interior passage doors, roofing
products, laminate and ceramic flooring, shower doors, furniture, fireplaces and
surrounds, interior and exterior lighting products, and other miscellaneous
products.

Forward-Looking Statements
This press release contains certain statements related to future results, or
states 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
impact of any economic downturns especially in the residential housing market,
pricing pressures due to competition, costs and availability of raw materials,
availability of commercial credit, availability of retail and wholesale
financing for residential and manufactured homes, availability and costs of
labor, inventory levels of retailers and manufacturers, levels of repossessed
residential and manufactured homes, the financial condition of our customers,
retention and concentration of significant customers, the ability to generate
cash flow or obtain financing to fund growth, future growth rates in the
Company’s core businesses, the ability to effectively manage the costs and the
implementation of the new enterprise resource management system, the successful
integration of acquisitions, stock price fluctuations, interest rates, oil and
gasoline prices, the outcome of litigation, adverse weather conditions impacting
retail sales, and our ability to remain in compliance with our credit agreement
covenants. In addition, national and regional economic conditions and consumer
confidence may affect the retail sale of recreational vehicles and residential
and manufactured homes. The Company does not undertake to update forward-looking
statements, except as required by law. Further information regarding these and
other risks, uncertainties and factors is contained in the section entitled
“Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2013, and in the Company’s Form 10-Qs for subsequent quarterly
periods, which are filed with the Securities and Exchange Commission (“SEC”) and
are available on the SEC’s website at www.sec.gov.

(thousands except per share data) FIRST QUARTER

ENDED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME Mar. 30, Mar. 31,

(Unaudited) 2014 2013

NET SALES $170,150 $142,120

Cost of goods sold 143,003 119,684

Gross profit 27,147 22,436
—— ——

Operating expenses:

Warehouse and delivery 6,112 4,536

Selling, general and administrative 8,500 6,969

Amortization of intangible assets 787 519

Gain on sale of fixed assets (13) (4)
— —

Total operating expenses 15,386 12,020

OPERATING INCOME 11,761 10,416

Interest expense, net 549 552
— —

Income before income taxes 11,212 9,864

Income taxes 4,316 3,845
—– —–

NET INCOME $6,896 $6,019
====== ======

BASIC NET INCOME PER COMMON SHARE $0.64 $0.55

DILUTED NET INCOME PER COMMON SHARE $0.64 $0.55
===== =====

Weighted average shares outstanding – Basic 10,702 10,904

-Diluted 10,815 10,985

(thousands)

CONDENSED CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION Mar. 30, Dec. 31,

2014 2013
—- —-

(Unaudited)

CURRENT ASSETS

Cash and cash equivalents $23 $34

Trade receivables, net 42,842 22,644

Inventories 59,680 56,510

Deferred tax assets 2,818 3,762

Prepaid expenses and other 2,306 4,749
—–

Total current assets 107,669 87,699

Property, plant and equipment,
net 41,721 42,117

Goodwill and other intangible
assets, net 41,319 42,106

Deferred financing costs, net 1,197 1,283

Other non-current assets 966 982
— —

TOTAL ASSETS $192,872 $174,187
======== ========

CURRENT LIABILITIES

Accounts payable $36,842 $18,826

Accrued liabilities 13,885 13,585
—— ——

Total current liabilities 50,727 32,411

Long-term debt 47,394 55,000

Deferred compensation and other 2,517 2,546

Deferred tax liabilities 1,876 1,920

TOTAL LIABILITIES 102,514 91,877

SHAREHOLDERS’ EQUITY 90,358 82,310
—— ——

TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY $192,872 $174,187

SOURCE Patrick Industries, Inc.

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