PATK - Earnings call transcript Q2 2018 | Patrick Industries, Inc.

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Operator

Good morning, ladies and gentlemen, And welcome to the Patrick Industries, Inc Second Quarter 2018 Conference Call. My name is Brandon and I will be your operator for today's call. At this time, all participants are in a listen-only mode.

Following the prepared remarks, we will conduct a question-and-answer session. Also, please note that this conference call is being recorded. turn Relations. over now Kotowski Julie will Investor from I the to call Ann And

begin. Kotowski, may You Ms. you may begin

Julie Ann Kotowski

obligation And in no factors are our the reflect or Commission. laws. I the CFO. the to turn its required forward-looking Certain We Good to XXXX the Andy Nemeth, statements after for Form events These forward-looking conference Cleveland, everyone. Exchange XX-K welcome the made to Josh considered these Industries CEO; Patrick statements. Todd identified occur There other a morning, which call Boone, Securities year-ended as actual and now and second Chairman conference be and call. today releases, except are differ like those in am factors regarding call by on and could statements XXXX, filings our which that President; materially forward-looking operations made, results Patrick joined may many by Todd to number quarter company's control and of Cleveland. the Industries to described beyond the securities with of to and cause call under update in over are events the in from would I undertake law. the are our circumstances date statements statements press today's

Todd Cleveland

revenues in strategic of operating led strong performance line right to operational markets, line of the update for business us update discuss and And by the market on an continued combination in on an was joining strong all serve. major call morning you The top and thank second company's the outlook. initiatives then our the our to we expectations. and patterns quarter we the quarter. overall conclude This in second and both with in Julie, bottom like you, and XXXX coupled execution with providing our Thank on We'll provide today. demand growth results

XXXX and a revenues quarter the diluted increased per per XX% of second XXXX, million and share. $XXX share $X.XX from respectively quarter Our XX% and income net second

Our $X.X revenues share were a our billion diluted per $X year-to-date trailing our per diluted basis, billion XX% to $X.XX approximately respectively earnings share. and $X.XX. revenues and and On XX-month net exceeded XX% a income and increased share

alignment a focus include and capital Our leadership results the of allocation are execution the plans, any and disciplined drive reflection strategy. and acquisitions on continued deployment of and talent planning, which execution our our growth capacity engagement, and in initiatives, successful with targeted key a of expansion initiatives operational strategic integration capital

candidates in demand Our a acquisition managing job industries remains pipeline environment retail of levels continue to be doing our a serve, we strong. full markets potential as fantastic all primary are our and

Now markets our performance. I'll turn call to review and further Andy primary will the who over

Andy Nemeth

our in strong a improving and jobs point ability leisure continued of our positive markets After Todd. remain our demand lifestyle the results. to fundamental of you, market ongoing demographics, strong Thank demand core consumer patterns, confidence and by supported year both a all energized housing credit, continued half optimistic strength, all markets. first consumer momentum in about environment Equity industrial solid and we toward and and and drive retail

credit we half work the put dry year, $XXX increase through and having And flexibility powder. providing further invested of more will million strategically describe. size facility capital Josh the to continue than first as our additional We the of

acquisitions. driven operating first margin organic gross operating improvement, margin revenue Our of results and realization, and second leveraging and and half margin and our fixed strategic profiles by and supported synergy penetration, costs quarter growth the incremental reflect our

performance. per earnings and the addition In share accretion

and non- and drive helping XX% respectively, which well revenue XX% RV mix balanced is our RV and Additionally, performance. is now

quarter growth second by alignment completed second first noted. marine the In of our markets quarter, collectively accretive markets. comprised quarter, XX% three sales strategic of overall are margin revenues, and other for and in year, profiles from and the of with the and the in which our consolidated XX% through we lifestyle seven plan, our advantage and volatility base stock business same significant and market the and equity RV many in of reinvested housing represent gross approximately up industrial period. operating leisure acquisitions half with were revenue further And Our in the our as were of buybacks the represent the the XX% taking XX% up

expansion for Additionally, our strategic we plans directed brands. support continue to invest capital expenditures certain growth to in and

turn serve. we each we'd statistics to to like specific on markets some Now of the

second Our the in which second which of the were were of over quarter. the XX% unit wholesale XX% shipments were Wholesale for XX% Total approximately of X%. up units second accounted RV which flat second quarter unit shipped sales XXXX, motorized the X% our level approximately quarter up XXXX the down to in XXXX of the prior history. and highest in accounted quarter revenues second XXXX. X% a are total year-to-date unit XXXX basis, down quarter shipments was compared virtually wholesale quarter second units RV shipment of quarter of quarter year, with were On units wholesale for our second

to the to retail and favorable domestic through. trends are continuing to complete are reporting younger states The expected as and estimate retail momentum more new be to current amenities. units buyers extrapolating we also May, with strong revised retail driving adjusted in year-to-date and with side, with practice. shipments revisions up Canadian demographic entrants enter providing be May continues the grow channel, for to industry, and larger continued the to demand families expected X% by supported year as future pull upwards in retail up the new and upgrade prior through as on year, strength growth Based to both inventory for X%, further wholesale be through consistent and XX% On the shipment past outpacing

on the last of with plant of XXXX on labor the and and XXXX. season. retail support been overall respectively starting Dealer alike. match balance production XX% Over levels RV likely to and to healthier support With for year expected workflow to which growth have optimize and been open support the inventory demand expected inventory done outpace levels industry strong XXXX. in workforce job strong. consumer several capacity to selling years, to wholesale environment continued should is the retail XXXX in levels field upcoming creating positioned demand appropriate houses. shipment of of anticipation for bringing for new be to shipment manufacturers the are strong model OEMs balance their seasonal models XX% well suppliers generally a fantastic And also calendar And positioning and growth hours depleting OEMs the be in themselves RV growth retail RV dealers their a have continued to have dealer expectations, flex The their years heels and

The industry organically patterns. OEM, for to dealer optimistic half drive model. fundamental and marine of both we the our points RV the incremental and content Our And further retail represents as and of complement and trends our overall expand industry XXXX and to well the continue reflect business overall leisure has and operating side are supported ability touch An gross organic margins and ideal full to growth. an traffic product and strategic confidence model, expectations strategically business business value continue by a help business and the proposition. family marine opportunity lines drive our about year increase and market about XXXX and our in to component lifestyle presence, second

approximately an Our first space, acquisitions based second quarter approximately this brand the half of XXXX support And are market the through X%, combined of off wake the year to and over year off sales north single winner After to regions of providing east through and country. the a aluminum up carries digit goal continue channel built XXXX. basis, low ideal OEM of point continues expectations. completed continued and foundation April, on growth suite used make four solutions market We the high averaging which sales year with with and full- bringing were of XXXX marketplace. ski coming our XXX%. in an in representing comfort to in strive June, is particularly XX% OEM revenues on for products and focus overall sales XXX% the strategic of the up mid-west and penetration rate for market and the a annual since and consolidated positive operating up both QX toward of boats marine inventory and to X%. currently revenues based allow on industry All marine Year-to-date organic and their options in demographics. sales Marine X% full realize This on extended in up pontoon capacity and the marine solid retail recovery, value were model, leisure convenience growth QX, steady which boats, resources the levels added of needs turn continued has of experience. content service more the based our our to aging on increasing indicators another and the to inventories, in

XXXX, in with industry the of exist shipments southeast business, in through improving our credit. than consumer the and average industry on XX% manufacture XX% period, the and up outperforming currently regions than confidence, rate, and the represents sales second up which to in in May. of On and industry interest XX% jobs side continue year-to-date particular optimism our and Texas revenues Shipments represented growth, low low industrial approximately growth XX% consumer quarter same housing and the estimated XX% over sentiment at country housing market similar for more was MH A improvement drive inventories southwest the XX%. between housing better of strong of total the based of

looking basis. a strong patterns to XX% downsize. housing Our X% starts trends up and demographic unit and demand were in per our is content market second time homebuyers indicates on consist Residential expected first up leisure a both quarter the to year-to-date those lifestyle and with related

have residential industrial the was rise region, opportunity, from respectively XX% multifamily markets X% residential of a increased XX% housing the and up we X% focused and revenue and base result respectively year. consolidated strategic starts tremendous and XX% the single start which of strong in quarter commercial of hospitality, our XX% Our XXXX the second And west six Single high where as and represents in as second are residential total quarter the months and housing up in organic were in revenues multifamily of growth. on well. and first housing, both

We markets organic in kitchen, for and to have growth and bath of runway leverage product suite the our this continued offerings. ability complementary continue full significant shower to strategic and

and the end continue prospects. be quarter, fourth into third head and we to about markets we As optimistic

fundamental of our industry and of and favorable quick healthy the and employment strong the allure growth. As are continues based are off functionality demographics, influx with credit getaways consumer to and leverageable the of including recreational availability family by and more we variety active primary rate, be supports four by leisure the our friends. lifestyle, steady RV and high which Momentum slow younger diversifiers for market, in filled of supports, markets attracted and in rest market, serve wide who lifestyle the supported confidence sector family the our market outdoor growth both trends, relaxation into lifestyle by and healthier model and a housing

to market. September, also and and for been upcoming Coming RV and hold the off and low of the In selling are a of XXXX in mid enter year support off full the wholesale industrial shipments as annual for year turns markets. and continued of the wrapping demographic trends shows, that to we almost changes lifestyle norm are and about a housing sales season, XXXX model be creativity the well On markets the successful model drivers decade. retail strong, positioning the will be sell-through which these same OEMs the poised up single for will optimistic leisure macroeconomic season their leveraging of XXXX anticipation resurgence, houses innovation The and for digits. have dealers RV to remain the a year inventory marine up business side,

residential currently We housing, rates are the double MH and in in commercial market digit the digit single double markets. for housing growth western fiscal with particular XXXX and anticipating in growth wholesale hospitality in low region growth mid units digit rates

first six extremely As acquisition representing our markets. XXXX, million an have candidates, accounting we for all Todd strong continue we primary pipeline of approximately noted the of $XXX to annualized acquisitions seven of revenues. of Through earlier, months completed

Corporation On quarter acquired Dehco. Company and to the the over RV Collins Metals, the Marine now we in & of on of the Marine on we and the MH who additional Joshua the our and industrial Metal first in and provide marine side and call comments side business, Accessories I'll Products will Dowco financial turn And market business, second Indiana acquired Aluminum performance. our Moulding quarter.

Joshua Boone

Thanks Andy.

and the net seven consolidated acquisitions the quarter same $XX the sales both Our XXXX in million we million addition to and efforts growth XXXX, acquisition. completed quarter far second the second thus approximately share XX% expansion $XXX increased product reflecting $XX The revenues impact $XXX contributed market million strategic and of for the months. organic geographic for of quarter in from and first million in six gains, of in to

and Revenues the XXX% RV marine markets lifestyle from and revenue XX% marine QX, RV XX% noted, up revenues revenues with unit Andy XX% As $X,XXX and our leisure up from up increased XX%. which increased comprised housing per from over MH is markets of XX% up unit. our markets revenues content RV industrial with XX% to and per industrial $X,XXX XXXX. revenues increased

MH XX% from unit per estimated unit. Our $X,XXX content $X,XXX increased to per

was Operating margin by gross to as and XXXX from $XX acquisition XXXX Patrick's labor revenues, in delivery a second in points the cost realization expense continued expense leveraging increased expenses to and our million of due fixed profile. increased increased points of operating XX points, XX% second basis efficiencies, acquisition. second gross relative increase amortization XX.X% primarily and the the to result acquisitions, Warehouse XX increased XX the on XXXX margin SG&A in of margins driven XXXX sales over operating were expenses profile a and and Operating incremental synergy asset certain overall to improved acquisitions Our income operating higher quarter. the accretive XX%. increased basis Intangible completed prior growth in XXXX from having and activity XXX order. months. basis The from in our quarter

the to For prior XXXX, the year, second Operating in X.X% factors the six due months, to in margins $XX were basis XX operating described. million. X.X% from of increase increased XX% compared income previously primarily quarter an the to points

the XX% Our second net income $X.XX the share of in was XXXX in prior a compared to quarter to $X.XX per diluted year. up

quarter second approximately effective Our was XXXX tax rate the for of XX.X%.

discrete of year between our full the effective tax and compensation For and rate we're be excluding stock XXXX, to impact XX% other estimating XX% items.

the sheet. to balance turning Now

acquisitions cash the XXst, six increased growth December Our business, the approximately capital seasonal total XXXX. working from assets $XXX generated quarter compared in and the million up. $XX of our XXXX, of of the primarily ramp of addition to $XX operating approximately reflecting flows million In second first months, we million

generate model operating Our ability and to recent flexibility the business flows support acquisition us our provides position and growth strategic current to strong tremendous with plans. cash

flows we $XXX in million. XXXX, cash estimating For are excess operating of

relative credit second position EBITDA X.Xx the revolving million. at leverage Our to approximately our the expanded end XXXX, In was facility of to $XXX June was quarter.

allocation we by to strategy, in includes the Consistent maintaining strategically disciplined leverage which $XXX million, opportunistic to dry quarter end cash us provides at to approximately our with and execute capital a allocation with was flows capital capital on being credit the share market. which and discipline powder with second position. ongoing operating shareholders Our strategy, volatility buybacks, when to look continue have return flexibility the the availability on equity of combined the recent on capitalized our

the previous of million, amount As stock Directors XX by an amount Directors. In our acquired average cost shares to determined announcement market under $XX on at in that a market XX, previously per program open management total Board under remaining volatility XXXX. XXX,XXX share continue announced of future, through price increase of be next guidelines in we in Year-to-date for pre-established million. to of we May July over repurchase the may approximately approved based of may including time share our authorized as January XXXX, price, common time stock in and the the the from the the $XX.XX conditions to Board on of shares XXXX, current the an company's $XX months in our repurchase repurchase and

months new spending product and capital process efficiencies development. in investments the first as million expansion, geographic increased capacity strategic and our XXXX approximately and as focused on $XX Finally, six of well

year $XX be spending the of we capital total million. full our to in For XXXX, million $XX estimate range currently to

to We throughout remark. given assess needs make continue That our adjustments will however the remainder the where year demand and necessary. our Todd? of market completes

Todd Cleveland

Thanks Josh.

repurchases. of current realign XX operations demand expansions an our we've strong core our our support reinvesting all markets. actions increase and to of improvements XX and and to the to stock expectations, For continue anticipation our process acquisitions XXXX, strong in line last facilities focused business remainder implement The end expenditures, and We're our improvements contribute the to capital has at and in markets, taken and making existing in top growth. organic into XXXX our on demand to continued growth strategic our contributed capacity driving and through over bottom the operating months expected to of

organic ready now to service, providing superior level and This remarks. our In shareholder received addition, have end and and to team provides our members, partners execution the the ongoing strong our value. highest the and by of take the facility the flexibility valued continued of board to our shareholders capital with opportunity expansion is growth. provided XXXX returns, strategic goals an and markets recent from driven strategic the extremely plus banking capacity on our credit products We're us we financial of directors, made Also and both X,XXX existing the date support driving positions and generated content plan. focus as for reach XXXX us foundation, expected prepared suppliers, avenues our and The of additional delivering as have well increased of customers, to questions. synergy we opportunities us acquisitions in afforded

Operator

Instructions] [Operator Craig Baird Please we Thank have And Kennison. ahead. from you. go

Craig Kennison

questions. on lot got you in week, based could down the a up of concern about a been you and was likely mean think of that guess what address know of the be shipments or I'm RV regarding business for and of the among outlook the down earlier number could the there. cadence know the guess maybe first I summer balance the and rest mostly shipments you will Thanks what they good be asking second schedules the year? give will the they've the Hey, because of how we shipments June morning. industry. if we half. of on I the unfold the Wonder production be taking Yesterday for A my rest half, in the investors, off XX%. production, cadence this feel might for year throughout and

Andy Nemeth

Andy. is this Craig,

that As industry RV it continues be retail retail as continue tell well strong. retail, demand. our is a would perspective to hear confidence of wholesale relates you to to our to the and related to points I resilience touch and And we very that compared out

expectations certainly are our that the to to the through see rest of continue and strong the through year, we're So retail going selling season.

keep As adding we to fantastic balance. on able be relates a the flex it models, their job noted to capacity of remarks, OEs prepared have wholesale, think as we to workforce in their our done

positive last QX coupled calendar some as relates two shipment call perspective. gave year down that in days to it day put would and from shutdown this And period, June, also June three maybe of there to two with one teams even rest. to less expectations, due was it really while This the our kind so everybody's which our in was,

we look are we think it, well things at as very So calibrated.

digits we even the flat think expectations. would there's kind it's wholesale. with QX So is we're mid-single flat I on to we down of at bit if And look in our demand at be down a would QX, thinking to view numbers, we expect as see QX, that look retail type little

been the alleviated. out quickly the in marketplace the I are think being that concerns and have balancing inventory

the that with with now, again flexing. rest being of XXXX well so and are that year way the And itself very we models positioning the think retail especially the is strong, right

don't that we've we the by again, minor on the So well view going to in OEMs think as view We as this is from but flex softness with we business an this disruptive at as to work got industry and this diversification our not got call --its all. great to manage model. perspective, the now again, We've any an do of the offset any issue. it help in RV side. side wholesale way some business, We're overall

Todd Cleveland

just again numbers OEs lot to add, but And I been going this That about the can't and capacity third I like potentially have in down shorter from talk four enough of of still And OEs to the stress capacity there's the add days that daily quarter. taken units Todd. Craig, is Andy said produce a opportunities standpoint timeframe. in similar a a

giving everybody we to re-energize at were to where align compared opportunity their So that's workforces of kind more their costs the and readily before.

Craig Kennison

do That's the helpful. And expand XX organic two you give One quick levels, the given an still for on basis? to margin you then rate annualized growth And like production XX could can changes questions. you feel points basis us the just in two, quarter?

Joshua Boone

X% correct. Yes, quarter growth Organic was industry is XX%; that in was of This growth. the Josh.

for operating a margin. on year place to put our XX us back increase industry to expand the And basis year-over-year in a So points operating basis to able half achieve the net it XX% that margins. of of be XX puts to will expectations still at growth. on are a That

Operator

go Securities we ahead. have CJS Please Moore. Daniel From

Daniel Moore

up. and I What costs margins remainder taking follow the margin Thanks year? for outlook is And raw material in of input guess for pretty sort on bps increase what costs operating to I quick morning. Good XX remarkable. of the first Operating the impact, any, despite follow here the quarter your the did questions. if a wanted increased up have question. rising

Andy Nemeth

when go and of the and up, back continue Andy. our cost that's our the half the first we when work currently. and have how customers that's of material to Dan, the margins and They with through so our costs on prices we and maintain relates it both pass our go the those we on at the minus prices to most expectation, again saw pricing we We year. And rise kind We expect both down. of to on this of side is and margin. commodity stabilized year as plus as flex half work, look we

Daniel Moore

Got helpful. it, very

a five With there Is be like would nice are acquisitions call to to the strategy revenue. to mind you series of continues come next in --after ticking three looking of RVs you'd there now just lower XX% over Is balance years? a regardless a have where the for see it target total creative or up? is about opportunities to opportunistic of the and be M&A they to that

Todd Cleveland

we side. certain in a a don't Dan, on marine of themselves space is that to that I the And we're side. the the --continue I get the amount. there's targeted were to of Obviously, RV growth. really have out, take say advantage play very internally year. to on first Yes. going seeing mandate obviously aggressive Todd. really any take of of don't the to we anything dividends that place opportunities this would with along We're acquisition opportunistic markets half the and advantage think in the their and let

that driver advantage the we and going can be move, of. I think how be feel take overall opportunities main they and the markets like will that's to probably we now

overall for done integration value performance. we've our and As in past synergizing synergy standpoint a from

Daniel Moore

if as a of quantify do dead horse, lot on so that the range trade. talk destocking color the forward sales just of lot obviously see a the of congrats September beating color and it's A but and the lastly perspective you for on this you in of of dealers Thank kind about this and numbers gave already, what a from mindset of inventory look XXXX helpful, Very to tariffs maybe like state the describe quarter. if shows your press, we impressive in lot of looked or continued apologize might --in against RV cycle. general we and

Joshua Boone

again. Josh it's Dan, Hey,

from is here the tariffs, still quarter. that's way the QX the was implemented one in aluminum and was Regarding that side the worked through early late obviously, its at QX, our

put a half don't the in Regarding but the have year. significant the impact place, announced us been other of have into to to it place come not we tariffs if were to back they yet into expect

Our imports COGS. We than expect not less from impact China a of that would it material in XX% have total our to perspective.

Todd Cleveland

this something as year. we out impact the Todd, everybody's is that the believe being I mitigate people They and And dealer want from time I do together going do the to pointed I add, have the said, just to look ways with going spend I'll working move a as deal said, dealer's their is be want is out. things, retail board. together. families. an OEs --they're an offer standpoint innovate need together to the shows cost to think there overall look it's that And working to the try with believe to think to through situations. and lifestyle at want amenities They Dan family think reach to we And and system across they customers that to we and of different continued tariff over the the next That to that kind months leisure the I being six to

a so space. lifestyle, people which people's the And in have other whatever cost lives from the leisure benefits this cost believe additional we of point least at from compared to us may and gravitating standpoint they're at marine RV when that all to that be, opportunities

Daniel Moore

Elkhart look September the out and seeing in show. you to it, appreciate RV Josh, Todd. caller, forward at Great

Operator

Markets Capital Please Andress. have KeyBanc go From we ahead. Brett

Brett Andress

May question a like If the post industry you revision presentation retail about in basis. Hey, dynamics, I good Craig's on your grows think could RV estimated morning. XX% to follow up more answers I your latest tracking on something initial

that in So XX% have sales just and months? curious itself July through several channel. the what plus and and of over you're points the I seeing I'm last across that few know on June retail touch sustaining different level whether you here is here

Todd Cleveland

and This say choppy retail going our getting would I of through still double-digit mid I been information the confident that but here, in to where high and touch be up kind selling moving basis. It's anticipating for that overall little year-over-year would single, dealers. a we're our I months months based on come June to things peak very from would has Yes. as say points, we're throughout are these Todd. July where we're are from the say and numbers is

Brett Andress

one which share quarter. spread last growth Got it, the That elaborate organic the understood. presumably And very XX% market then bit versus more a last is little industry the to on you growth can similar Delta? remains

sustainability about we of So of the how think into that the out should balance the year? performance

Joshua Boone

Yes, Brett, here. obviously great Josh. had is two this we Yes, quarters

with first strong we year throughout includes of number of of to to The The the the tough market half also momentum we growth, share comps I net is continue products progressed organic that expect gains, year, say as growth, expansions, would - new would geographic back and those and a half are organic to a Industry continue. the growth pricing.

not all the And year. the the back pace a maybe in first in year, we're with so quite half the here of to expect but the we that at continue factored momentum in, half seeing of would

Operator

securities Conder. Fargo have we Wells ahead. go From Please Tim

Tim Conder

gentlemen. you, Thank

your little in still beginning the a basis sounds keep to take going you're you're of XX margin dialing you on What how it able the just bit bit the to the relates sort adjustments about of or little alluded more an it little industry making sustainable going seen be and end high Andy, that high here here to everybody here. you maybe you XX efficiencies improvement. getting? mid we've guess on of types very as I more a because bit, like the talked sound from XXXX. this your to the efficient drill it Just side it probably that digits that breath. expectations come that a these RV say to and points of are flip but But to and into touched from over year, at obviously is this single catch XXXX up could time? the of Is but year and range. Just your of along less pace operations to What's to like in side pacing adjustment things

go little that walk little would. bit if maybe through us Just through a of a you bit --

Andy Nemeth

is This Tim. Andy. Sure,

from optimize, our again very our grow I As ability diversification margins. be strategic continuing mid and mentioned, is we've and more our --we that force about RVs, to to three model. and again even a some able perfect. efficiencies with that going steady labor is like build numbers, content as strategic on and fluctuations perspective, RV are our through so a we've at look that about realize revenues. drive we very even and confident All quarters it of end of continue other in And right volume drive and over and feel seeing the we've that single-digit gotten good And to growth talked work as our several and markets both we're fixed as expect our RV been perspective out optimal on input able able but costs, we cost results, going to of synergies again to our execute in now. last the to that the alluded to And little here environment, we our with some labor how and leveraging we'll to we Todd very got feel of high fluctuations at be arms from we is an about to provide good the And from around kind wholesale to continue perspective, the certainly, lead continue those growth add performing the said, relates overall business nice realize acquisitions level, I organic the model. labor. we've continue pointed so initiatives in to fluctuations to and are really incremental like slow well, balance to with our We're do an to as which We're in productivity. look will to and to we're space our

Todd Cleveland

there. pause industry I a what leaders inventories be continuous off. And don't have the any allow taken most I'll believe the of our business the just programs while have out over we add has some course that of the Tim are to to dynamic kind running industry as end build units that that formal improvement we

there, initiatives double-digit were take evaluate within able leaders taking organization to keep they outstanding we Our RV with side. as as to have that weren't weren't closely implement to look that to the done job and of as the pace an time and the opportunities quickly at trying on growth

get So to recalibrate with levels we've of to organizations the two be, able than kind internally and three line with in and or been we're more industries keep serve. doing last need to they we've probably where from in pace a grow continuous things improvement the we production standpoint, as done to probably

Tim Conder

helpful, are the know standpoint, that a is or for X% that and XXXX what that net calendar to gentleman. able from what model up end to here? Okay, looking somewhat at And do see. want year the to somewhere what to to X% fair on industry and a will flexing you all inflation you coming models Is OEMs XXXX units the of pass new through cost assessment the a in then look And consumers whether basis down. reasonable the out on a

Andy Nemeth

market there's can Andy. this end we tell mitigate -- really we again, do user side, go is to to has can't buying going can't we our what is but manage as or really relate with go. input the to I to OEs can't-- in perspective, we We've can't help half, we're mentioned or and where going in end the but pricing the with the the We on our that work to comment comment can lot do can our cost going it are least back perspective OEs you say from up seen What speculate comment to first is on continue a fluctuations. Tim, that at we and from on half we stabilized power the pricing. what the

Operator

Merrill have Rafe go Bank America ahead. Please From Lynch Jadrosich. we of

Rafe Jadrosich

you lower taking have improves. my the good efficiency labor on cost opportunity question. morning. you and if normalizes and of wondering quantify production possible was to I it's for for Hi, here Thanks over time your kind as

Joshua Boone

model Josh. production. is unit to Yes, with this a with Rafe, more the savings associated position the in operating less exact and efficient quantify a not Hey, effective, cost we're

We less our unit improvement as QX of here of through back the units improvement kind In operating in less of kind the will pipeline any the the with and running to say helping production. associated half the efficiency mitigate platform in is QX, operating workforce. cost that offset we with and our overtime the order the QX of recalibrated

Rafe Jadrosich

operating XXXX were operate labor will and or efficiently that you as look of year? of can at the If the as you into where -- next first in you half year you half back improve this

Joshua Boone

first expect year to XX I in year, carry throughout the significant realized would of but of --we into of say that year. the expect back second effect particularly kind would year. run say over we've to XX improvements I will and the momentum progress last first the quarter, in half incremental were months, improvements the we as good the into the continue we itself that the half have gotten We'll the half of rate a the spot to for

Andy Nemeth

color I'll as Andy. add little just is well. this bit Rafe, a of

yes, able to less So of we'll overtime, realize productivity. in more business, the RV side the be

as we're a it. markets which you to And again we a to arms I efficiency lot well, lot noted there, improvements extremely --I And efficiency we've little is well. we of starting that it. think degradation three think of a are going so overall other overall as and or also labor performing Our don't our expect bit got around of tell inflation stabilized. see don't expect overall labor we're we've

So little we get on side, costs labor we're volumes to really in environment support label again, we again that up healthy variable as to continue going to bit we leverage continue our to to I continue through flow productivity. we're work bit want our our workforce to a may We going strategically. work think And so pick expectation environment, but fixed efficiency, think little as balanced the of stabilized. a do our maximize it's a is and I

yes, to we our okay. So but it upside I some I we've there-- view stabilized around believe it's and think be, arms got think is our there's going

Rafe Jadrosich

between think then about capital my been has -- and allocation buybacks? is question last within then you you priorities And for as any have CapEx just your to M&A, changes And there that investing non- in given do you RV share of some have capacity opportunity think is RV other additional the your Would possibly spaces categories? to you in gains that there more accelerate decelerated. --

Andy Nemeth

Andy. is this So

of to of at our of all continue nothing's pursue allocation relates would initiatives. equally to strategy to and regards to what those As capital with be changed look and it continue our call deployment and We're I going capital. each initiatives to opportunistic,

in to be be to today. going where across the to invest it opportunistic. view disciplined As our markets continue all in excited markets we're about relates business, going deploying And to again we're capital RV that to again that of we

to automation our the and expected that as efficiencies positioned And a to continue strategically. four of well tell to And will that but we're continue the very look capacity to added a we're to continue more quarters, to the six manage I'll well so also to business, strategically to from to and continue continued opportunities we support fashion through over as against at opportunities there four realize so we've platform. perspective, course we capacity up are returns. you invest --we optimization done to lined be three have disciplined last anticipated There and our look across at going in and invest and

Operator

Sidoti ahead. O'Hara. From we have go Please Steve

Steve O'Hara

the that you've And Hi, good position talk RV about you comes be just forward? morning. that maybe to now, longer-term? on based kind prospective think you want the of where said business XX% Can the of revenue do I is going from number current

Andy Nemeth

Sure, Steve. This Andy. is

target prioritize the to allocation have the we're a to market alluded and be continue to continue Todd to pipeline acquisition allow me As that --excuse driving a target strength don't look continues opportunistic drive acquisition going that. that business. looking all in do we of going of We're sectors got four to towards. we're to, our and us candidates across at, to We've to to the

about space there. As it relates I are balance, very absolutely the what opportunities about a seeing balance, bullish excited nice think and is are the you're the that we RV

we're that as flex view -- the we way based balanced the portfolio, move but a opportunistic that XX again thoughts or look it. that's at and about our thinking you that when on So may XX,

Steve O'Hara

better kind if little maybe increasing you as I opportunities on of picks side, if see little or the in competition a is area RV opportunities for and bit any maybe another a bit the a wholesale little marine of maybe deals anything in off bit here you that as some there? so see growth don't and or mean you one Okay see better up market or coming

Andy Nemeth

a healthy able we've the we're And going again regardless think on spectrum. we're be remain prioritize stay competition acquisition space the candidates with deals. going And continue to to disciplined to multiples and pursue of to in very I got pretty Again, of pipeline today across consistent.

we long-term I outlook think is be the at things look continues consistent. to

accordingly, we're continue again to acquisition to --we related to to we perspective. what that I evaluate So our haven't an anything but on want don't do think changed going from perspective continue there's to

Steve O'Hara

there you. in you mean me medium and and and of Okay what's then in long term? the comfort just the paying high on comfort tell the What's low leverage. on I debt acquisitions maybe sides down? and level Thank level your terms your

Andy Nemeth

Andy today. is with leverage comfortable very our We're position flexible. again. this very It's Sure,

for are short sweet us, feel X.XXx of capital spot I'm work you and that. to X.Xx returns generating going keeping is to to we Xx comfortable. X.Xx like up term the putting we're to tell that off a in in the the We and to really

how that's think kind of about we today. it So

Operator

follow-up a have we Daniel Securities, CJS from From ahead. go Please Moore.

Daniel Moore

again. you Thank

free I flow your $XXX for on. think around and the is lost your million sometimes you all your what's raised going -- OCF effectively generating cycle, Obviously, the we RV to talk guidance get ability cash year. the

to that by terms in driven And of I think operations quick possible M&A, improved it's quantify? versus was much it How follow-up. organic $XXX was of previously a million. versus if

Joshua Boone

Dan. Yes,

in leveraging back from half to just went related $XXX probably capital the was of million $XXX the really half we organic efficiencies, on working So year. improved million,

half acquisition. other The related was recent to

Daniel Moore

numbers the anything And in to difficult flow. a Is levels free $X or there you're cash that's CapEx looking share one given at and those guidance north recur? time of and those at

Joshua Boone

that. we not No, foresee do

Operator

go Condor. Tim from have a follow-up Fargo And Wells from Securities Please ahead. we

Tim Conder

the back What directional a be Gentlemen in get from a your just cadence a perspective. just of adjustments given of I end out but little on? could perspective in bit normalized here of maybe think on color of little if help XXXX, could from business anticipate helpful. that be half would sort component year-over-year we to color particular, would there us And you. would RV the you as are Thank going any give should the the modeling the modeling calendar you a

Joshua Boone

Tim, Yes, this is Josh.

we So XX%. finished QX at

flat For XX% after. the Absent any to would XX% back half growth a percentage to slightly for as expect year, future relatively be of or down between we the say be RV total. acquisitions, of RV revenues I would

Tim Conder

or year the the for half half. for for on Okay, just back back the the Josh, there, year maintaining it

Joshua Boone

back the For half.

Operator

this time. further no have We at questions

Julie her remarks. will for Ann to closing turn We it back now Kotowski

Julie Ann Kotowski

call I'll today. Brandon. conference replay at third the www.patrickind.com Patrick's back We A on will website of Relations. call. over on call being call turn to quarter everyone our again to look XXXX for forward under operator. And you our to appreciate be Thanks archived the today's And talking Invest

Operator

joining. you Thank ladies and conference. today's for This you, Thank gentlemen. concludes

You may now disconnect.

Patrick Industries (PATK) 26 Jul 182018 Q2 Earnings call transcript