PATK - Earnings call transcript Q2 2019 | Patrick Industries, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the Patrick Industries, Inc.

Second Quarter 2019 Earnings Conference Call. My name is Michelle, and I will be your operator for today's call. [Operator Instructions]. Please note that this conference is being recorded.

the to turn now will call Ms. over I Kotowski from Relations. Investor Julie Ms. begin. may you Kotowski,

Julie Kotowski

are from today Chairman which statements in welcome Good cause and today's statements. am the with call be Call. of in the in call many company's and Conference XX-K morning, Josh may could Exchange factors, joined its operations regarding of the Todd to and the Industries are securities our statements everyone, Securities number laws. forward-looking which conference beyond and Boone, the Form and our Patrick CFO. our Second events for control, a made other Nemeth, CEO; There identified and Andy the releases, Quarter factors Commission. These under Certain XXXX are on Patrick to forward-looking by President; those the filings results press and Cleveland, XXXX actual in considered year differ materially described I ended Industries

update as We except events the made, undertake are no obligation forward-looking statements the these statements occur after that reflect by date law. or required circumstances to to

would to now call the to Cleveland. I turn Todd over like

Todd Cleveland

from as you positioning Thank show focused season, and the at today. the shows, morning, Good second Julie be and the joining from share nine market through in growth significantly and with we integration dealer of dealer rebalancing gains. our organic, season. today, we fiscal the XXXX everyone, forefront strategy synergies market expansions call acquisitions Aggressive geographic the the in you, inventory in the XXXX quarter us on RV beginning XXXX operational in and the in the to organic model Fundamental thank driving continued recalibrated with XXXX second quarter our Ann. of our completed were execution for strategic initiatives plan and tactical the

Weather negatively year-to-date. markets have issues our impacted all

in potential strong four markets. towards indicators each potential primary tailwinds trends long-term demographic point and overall economic of However, and our

the second mentioned, modestly million we per to of despite continued were previously headwinds sector. quarter year each content prior revenues and up market in our Our $XXX unit from the increase

XXXX per and $XX were and net share and $X.XX $X.XX or revenues income $X.XX, net our share, income quarter second year-to-date diluted respectively. Our billion million per was diluted

I'll Andy review now over turn primary call business will and to further outlook. the overall our who markets

Andy Nemeth

Thank you, Todd.

markets. of As marred has half by noted, all second weather impacting first the conditions primary the been and quarter adverse four of year our

signal continued However, overall and fundamentals outlook. long-term solid macroeconomic positive a trends

which align are secular we markets, in Additionally, potential the each our about our to optimistic future of have cyclicality. trends in

and blossom organic strategy over the diversified the in offsetting Our synergies market presence past volatility, has from continue and opportunities to we that have our acquisitions proven years. strategic effective completed two growth and

XXXX our quarter financial wholesale levels the Todd On reflects our rebalancing continued as inventories impact against business, side noted, of second of backdrop of performance solid disciplined retail aggressive reduced production fundamentally demand. a retail the of RV with

the a alone units end down commodity an had unit production equates from inventory on retail between by in XX%. were down gap the been mid-single shipments the concessions our customers XX,XXX were mid-double wholesale shipments partnership in quarter estimated shipments approximately or as that top of second $XX estimated and digits down including against with Our an pricing of units to quarter. down shipments inventory widened RV impact XX,XXX the the revenues of with quarter prior and retail given pulled an the XX,XXX XX On pulled wholesale of wholesale first already out that digits. basis, XX%, in this million months of estimated The over to second

The dealer shipments declines field low high in open our inventory units XXX,XXX the to to unit houses units project on have from levels upcoming XXX,XXX RV and touch approximately excess been year. published from RVIA's XXXX. new wholesale in of on dealers depleting to XXXX through inventory representing the end working on points, double-digit and XXXX low range the model latest the Based for the expectations been have high anticipation end,

We run further growth the on and to shipment trade to of normalize declines continue based quarter subsiding XXXX. a maintain related currently end assuming the of channel the decrease currently with second half third quarter and through relief, end disciplined potential including as tariff which through potential continue headwinds are the of existing the OEMs war commodity inventories price benefit all in mid-single-digit production expect XXXX interest will wholesale retail their rates, the cadence production the and third upside to for rates consumer. We anticipate even

estimates, result approximately XX,XXX estimate for solid to that inventories XX,XXX XX,XXX being making levels pulled inventory dating second and of XX,XXX season on would be to we the an in at these XXXX, have a record out of their units lowest Based third channel additional in of five on the we last the back which dealer third the model and from XXXX the in start. a should years quarter quarters, pulled total units positioning

continue increased diverse We new positive ethnically future from shift millennials to and buyers emergence continued participation with smaller repeat buyers travel retail conditions. and channel, families of by to the and trajectory that based including current overall demand economic younger on demographic incremental trailers the believe remains the indicators

to in of aging number of the XX ages sales ages millennials compared increase the boomers total will of from and the of will million between consumers RV between number XXXX, continue as a XXXX; than XX% XX XXXX. to total the and XX XX XXXX, and by consumers million by and will XX higher the XX baby benefit XX%

RV Our marine business inventory in performance helped was rebalancing and the second space. quarter the the strong volatility in offset

portfolio is high-quality margin-accretive product synergies. marine generating and of growth of a brand Our is and platform operating companies organic strategic EBITDA gross comprised that significant

represents the quarter XX% year. last of and or $XX Our our XX% consolidated quarter, from the million in XX% marine same revenues in sales were up up

have deep drive to several with process product leadership results. geographic expansions and energy, in talent experience the skills relationships, and marine and capacity, team tremendous We members and

decreased marine X% retail of unrevised of on basis X/X XXXX states roughly second quarter and in Estimated the reporting. based shipments an the data powerboat from on

as Second year and first of marine respectively, XXXX XX%, to aluminum categories, the shipments. Adverse first quarter generally X% regions XX% and XX% with half impacted which XX% respectively, be the back shipments in depleted in down models, shipments, we and full in with the particularly weather fish engaging the X% summer the have in the quarter, half were represent and certain which and flooding result year pontoon and approximately will of over proactively of country second Channel down slightly in retail rationalization, particular, selling these as end already believe of production elevated in the in were the started. OEM inventories quarter. has the in finally been quarter alignment of alignment season a

desire. Ski season, as and ASP the boats on categories which are to XXXX high wake Confidence and for shipments, year-to-date marine in up the remains continuing in content term, head growth generally long marine led consumers represent the over more the model higher offer X% we X% units. continue marine into value-added quarter and and to OEMs

opportunities year units per strategic from OEMs point organic unit result XXXX mid-single-digit related XXXX growth the demand, a content related Long-term of estimated towards indicators for in fiscal and replacement as currently million the All position fundamental in point strong the marine growth. marine's and expected water as both a wholesale increased decline Our themselves cycle quarter the years production XX% the an model strong retail units continued and sector. boats season. towards four a in in over aging of the X next the

to business. the industrial of side Turning and housing our

and increased or XXXX. quarter over compares from second XX% sales Our the XX% wholesale million quarter This housing revenues unit represent in decrease XX% $XX our in to manufactured the our second reflects an total of X% of shipments. of quarter estimated of the revenues second XXXX and

homes, content Our the causing up of while older to to buyers of our first more in again to trends the strong these unit markets lifestyle in XXXX MH the as an inability fourth per markets and seeing due looking And flooding we demand in housing areas. are quarters leisure downsize set demographics the rural into multifamily the first-time urban indicate impacted both patterns population in Southeast from respectively, estimated consistent XXXX, and weather generation market. to with expected the XX% is and growth

which a is primarily the on fiscal represented mid-single-digit overall slow shipments business, due Based during furniture million to of on commercial markets housing XX% in remodel new factors in in second residential in and anticipating or after starts focused After to the start described, housing are the in the low we Census while our the wholesale mix rebounding we quarter, sales X% down growth industrial XXXX. quarter. our both Revenues and MH currently for slightly participate reporting, in construction Bureau and quarter X were decreased institutional combining hospitality, high U.S. rise, June. construction in

are products generally unit from X rose multifamily multifamily northeast X while in Single-family XX%, months. housing the a at in housing go trail the generally and regions declined last respectively. housing south the into starts to the Our XX% quarter growth and coming new to starts of by and new starts with XX% X% most

projects hospitality strategic housing have high-rise for have sectors already our in We and in and and continue sectors to significant in. we particular growth, industrial spec-ed organic in several runway and the where

up flex down the shower organic Our chain, kitchen, our products of potential and capability bath have offerings. to we complementary value tremendous and leverage have suite full also the and to product

to these Fundamental noted, markets, housing and have is affordability tariffs dissipating. by interest and capacity. costs, limited currently demand and Headwinds rates related as impacted and are strong commodity

after single-digit currently for are X%. starts half XXXX housing new starts in approximately low were first We down growth anticipating fiscal

finally houses the about frame, inventory as taking levels. RV especially the based the in selling rebounding excited upcoming well in of on Overall, the we're as season open all markets summer September our hold time

have XXXX, our total and basis flexibility first and cash in operating million each We $X market drive volatility, flows The cash over factors acquisitions second free sectors our allocation years We candidates appropriately positioning last first secular year down prioritize two the anticipating We the the off four strong due a XXXX the And deployment in markets in market half conditions disciplined being and XXXX potential cash generated see model of the of our to XX $XX capital up in of TTM half and of $XX of half initiatives. flow a to conditions million maintaining first approximately all of dynamic in on of calibrating and from same completed season during our may are our period. market to despite the the last we remain the pipeline year well. headwinds. have in to in as strong some with and digested acquisition while continue improve. of integrated full nine half

We drive value to are nimble our continue execute poised strategy opportunistically on to to and our return capital-allocation and results to incremental shareholders.

some turn to now Josh our I'll over call performance. provide additional financial on comments who'll the

Joshua Boone

Andy. Thanks,

sales our primary consolidated declines impact of increased million, offset Our in for four reflecting all were of which the net second the $XXX X% quarter by to industry acquisitions, markets.

the noted, operating double-digit margins. by previously quarter we've unfavorably was market, hampered RV decline our the which primarily improvement As industry in and overall impacted a both in revenue the gross

top up quarter price we of to of for going low and revenues the our brands share market commodity the gains industry year. the and platform leverage into half strong decreases On line, effect synergies first a growth digits with the in to and diversified continued organic market declining single drive despite market net

which XX-month market, lifestyle leisure XX% marine and quarter marine estimated trailing per X% of a of revenues content decreased unit increased approximately RV increased markets, per down our XX% $X,XXX $X,XXX unit, content compared revenues basis from on to RV comprised the XX% unit. up second RV estimated to marine and is and an per XX% with per the Revenues to unit XXXX.

the XX% markets per revenues wholesale $X,XXX industrial in quarter versus with to despite MH shipments. and housing up estimated MH XX% X% in per year our from decrease unit an the Revenues XX% prior an increased industry unit. estimated content increased

compared slightly X% XXXX. industrial side, and revenues quarter second with starts were housing the the declined of quarter On down in

impacted customers along passed decreases nominally have have we As partner margins worked the continued a in our discussed, as market, with we which and in our gross our have through to higher-priced declining quarter. price commodity inventory,

current inventory Our forward. costs pricing aligned appropriately moving and are

continue and XX.X%, basis second margin was quarter four which revenues the higher in production and in markets declines year, lost as the declining that relative revenues, all variations points year. in workforce our work tandem the term, gross to inventory the cost manufacturing rebalancing first balanced weather-related a short the we compared industry of our by prior to end with facilities structure in and half hampered carrying impacted of the markets Our issues end corresponding XX navigate levels, in RV the was schedules in adjusted in a certain with overhead with maintaining short-term

of XX% relative amortization sales impacted and driven and certain by to second increased our quarter. were points, acquisitions basis expenses delivery XXX margins operating the Warehouse XXXX our expenses profile. having operating intangible Operating profile due was to negatively margin expense and in which overall higher asset

to We synergies our our have distribution of with million are within back executing in XXXX effect XXXX. and over cost-reduction annualized take of the the acquisitions target $X half an actively our benefit beginning on realized half basis

income in second approximately Operating first from points $XX million the the SG&A the the or year. a expenses XX in was of $X from year of the compared points sales were previous down decline quarter, X.X% quarter, of of basis in basis quarter and sales XX XXXX. to down million prior X.X% XX%

The prior with compared of of operating first X.X% second quarter points flat revenues. increased on to Compared decreased margins XXXX, basis basis year. points relatively margin XXXX XXX operating quarter the the XXX

second quarter. The other margin margin half in resulted XX in our year, of operating to from LaSalle, the described, the the first of overall basis and margin for LaSalle resulted For dilution point operating the coupled margin operating the profile. decline dilution quarter with factors previously the

XXXX. income was second net in XX% quarter share second XXXX Our the from the the quarter diluted tax as in rate our prior And reported effective of the for was year. of down overall XX.X% $X.XX, per $X.XX

previous impact full our the tax year all-in the XXXX, still onetime XX% XX% tax rate remains of to of effective excluding items. estimate For

sheet. to turning the balance Now

of Our largely million total the June accounting of of related XXXX. cash generated X, XXXX, lease assets to $XX increased we on XX, reflective compared approximately of In of operating million lease months right-of-use first Andy approximately $XXX the noted, six million approximately as XXXX. million in first the months $XX adoption XXXX, assets recognition the operating standard January new the as to $XX of of six

with We flex consistent demand levels. to and manage will aggressively continue capital working our

to organic Our model position cash flexibility and months XXXX. provide over XX generate plans us current operating the ability for flows the support we've strong flexible business last and to our to and acquired growth XX the businesses strategic

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

we to $XX X.XXx, our quarter, liquidity put execute work end our Our ongoing EBITDA the flows, of $XXX on second our disciplined capital leverage first allocation to to facility. strategic strategy. and quarter expenditures with million ample continue approximately invested we credit position the approximately have growth XXXX operating the to expansion on revolving was months flexibility of our million capital support And relative we cash capital at to of the and available plans. Along six having in of to have in continue

For spending. the full capital are targeting year, $XX million we approximately of

That completes my remarks. Todd?

Todd Cleveland

and trajectory, and Thanks, housing lifestyle leisure supporting we conditions and our about overall long-term optimistic industry the growth Josh. Overall, remain organic potential and both strategic markets. organic industrial

agenda strategically of goals utilizing allocation execution products of make provide continue increase strategy around business, grow in the capital to investments be strategic our driving our organizational customer focused to breadth and our and awareness disciplined our Our workforce. we

support will tactically in done model to leadership strategically in past drive our to flexibility and We our and financial, while we'll execute all and value, talent solid we've continue maintaining shareholder leverage business platforms the our to as customers.

we shareholder providing of team on the In members, goal Directors, customers, from suppliers, quality, to to our ongoing shareholders affords X,XXX-plus our partners opportunity addition, service continue the highest value. our support of receive and level Board us of and banking our focus

We're our to the now questions. prepared ready take is of This remarks. end

Operator

[Operator Instructions].

with in comes CL queue from Scott King. Stember first The the question

Scott Stember

the just -- then I maybe know you're guess, some just to about well. you starting made marine go seeing markets? the just what in and RVs, clear open the the about and through that six lot months then July you end the as are to could if that individual the of a Maybe impact things I segments two up, are of been first Can the weather as terrible other up. has in talk starting reports talking starting and with there is weather

how back of Just at half the look the should we year?

Andy Nemeth

impact in four Andy. getting half. all summer of is in really has and Weather mid-July, especially on the We're in an of this season really July, the our the sectors Midwest Scott, first just definitely into northern markets had here the country. in the

as through so we of kind this. would we've bit results, I And moved tell seen you, an old of mixed

the of as on strong. we shipments be over of to retail from the our still RV units think a And the going there's number perspective, and inventory next out think retail business, have The on RV side is noted side the been side. RV stable we wholesale again, We quarter. steady pulled

So I and we sectors the and the half, and Southeast the strong been relates sectors that the bag marine the think stable business, fiberglass hit the really very of in The and would tell of South and side half. on and South to North saltwater console been country. it mixed the aluminum solid have hard but center still RV retail in have fish the the the is you northern in the as pontoon our first to first powerboat

again, in fundamental two think retail demand strong perspective, from so markets. we both I think, is And a leisure those overall, lifestyle

the on bit the out through well, has Coast weather some the residential of side, the we little the on the wet and inability side the make is has way our been impacted but again MH set homes, by And housing as as impacted there. to Our housing markets building West on weather, weather of particular business here. in of year really cold improving a

of still really we is all we're what most for through there's But improving across solid head half think XXXX. sectors about I year. four and the positioning And excited again, as demand the overall, I back like the feel fundamentally think we

So commodity potential noted, XXXX. into interest heading with reduction, all to are rates, our appropriate it of into we feels like costs, the markets some and some tariff with year as four calibrating tailwinds of related the tailwinds, back pushing

Scott Stember

fall guess, quarter, RVs, in Or decrease August? back of the we declining natural going off, half about third back to when numbers things terms? law the particularly to decline Are I year still in talking the Just of rate should absolute of just year's, the pressure your comments in the last from started because some seeing of shipments.

Andy Nemeth

Yes. We full model right steady levels and wholesale second the for the and season place tremendous side, XXXX and our shipment for positioned decrease, of the through discipline and quarter. decline taking quarter think the into from have will really remained the rate third now dealer There's the and perspective, appropriately really upcoming balancing on shows.

Scott Stember

question the the year predicted but be? points Last that operating maybe get or guys margins in to you had XX Got going where operating just be anticipated you related LaSalle. thinking Could I points, margin to back for you're it. are And would about last was quarter, update before XXX us that up the basis basis and queue. the

Joshua Boone

had out operating down Yes, outlined. basis of pretty on points that shakes on related the with that to XXX Scott, margins as of We much you this track Josh. just QX be dilution We're XX will achieve how is impact communicated to depending the LaSalle. of

like substantially from deplete an perspective. uncertainty looks what We in QX to inventory, dealers really it's expect on the from some that to shipment RV wholesale declines But perspective. as QX continue narrow

XXX to a depending in basis points we QX XXX, I of July. just maybe points op -- margin like margin. would of achieve so still you minimize basis feel of loss we shakes can XXX XXX on narrow And tell But still, how out,

Operator

Securities. from CJS the The next question in comes Moore with queue Daniel

Daniel Moore

Any or impact I margins changes you overhead levels depressed a would a the more long structure to operating you're mentioned you guess And demand. remarks cause in cause to any aggressive of that -- And quick the aggressive still carrying structure? to may to cost reducing would that You quantify sort follow-up. be in way shipment quarter? there? the What operating in be guess more you on of the of I prepared levels current on relative what higher how

Joshua Boone

depressed The Yes. Dan, not base, level this macro is really our base. driven really or secular demand has Josh.

levels we've we as the half structure a back investments so relatively slightly up the the in made at of chose talent to XXXX, so our the And and at outlook for significant first positioning higher the organization maintain cost look for half and we year. these for of year revenue

year, to As the progress half quickly business. to back relatively environment, from we the costs pull if fundamental changes of would levers macro and the pull a out look we of see can we

If would control expense line say you I look QX. million $X the at in expense we down from QX, operating the SG&A focused perspective. from on

levers it's points We perspective. we without it, to perspective today. in completely pulling from continued quarter, XX business at from quantify what a significant the cost based in that were levels if easily be the on revenue were surgical But to basis

Todd Cleveland

Todd. Dan, show would to that going I'd telltale this just obviously come that, say be come out after on and the of dealer what a out early balance I going season, have type just orders for the feedback it, a and that's year there's just add really and depending of of XXXX. sign is specifically, September more to lot that's

count in quarter. fourth can you additional take-out happens depending some on what So on probably the

Daniel Moore

of expect the on now of for ball year-over-year? flat The see expectations digits more say, stable, show a between color getting And to question. term, then great trending you trying mid-single wholesale down do -- it's near least appreciate at Very very but colors retail get that side. low the Appreciate know would the and a you I the helpful. stable, to crystal Or and, similarly Just sense, that. the in kind September? in

Andy Nemeth

retail consistent stable. the That's Dan, mid-single down this side, and is low take Andy. digit to on We accurate.

Daniel Moore

taking lastly, the -- you'd Are more to just growing slowed in cash. want Took quarter here at approach term are it changes in to get in a to? alluded taking a And ratio to remarks, rank out you then, you, the Or this debt little leverage of of a still this? you M&A. capital choppiness allocation. near of term, in there bit. given little chunk M&A but terms any Is and down just a capital prepared priority bit Perfect. of Maybe of ordering a near allocation sort cautious least? while

Andy Nemeth

this Dan, is Andy.

stayed the of allocation, really to on first business relates pretty the side heavily two capital it opportunities that last focused the a organic disciplined we've of As years very done the the lot of year. we've half from really the acquisitions throughout and generating there. great We in

we've M&A pipeline. the a we're just staying And got full On disciplined. side, still

I think we were poised, and execute. be have able remained to to poised

not marine So watch opportunity. space. opportunistic stayed think we going it's as due the to the lack disciplined We're be the volatility about Again, way of very about we to of there, a it as we've in well. kind RV

Our would we industrial feel and say, of side housing but make kind about strong and opportunistic. we're candidates still we want got that acquisition we've on that our to I we positioning, housing markets, stay sure

the markets capital and we're deploy to continue in these deals. believe we invest to being so in want chasing absolutely said, not still to That business. strategically And

really appropriate other we're and our in than make to we that driving the make. nothing's that want So changed out shareholders markets play value investments for sure the we're watching the

Todd Cleveland

And quickly. profile, from an not very were We M&A we I add the capital can leverage would just regarding perspective. Dan, delever deploying

$XXX about, first We year. as the million you chunk of evidenced, As generated debt. out of six of taking months flow almost just cash talked a

plenty once clarity capacity see delever can positioning of runway So as we sheet to quickly, Andy balance forward. going have kind we ourselves and little very let play the a continue we bit to of described, more as things out,

Operator

comes question the next Brett from The Andress in with KeyBanc. queue

Brett Andress

price about growth? other growth guess about industry how I guess, you, of Just Todd then, within factors little that dig just single-digit could into Andy, want low Josh, your any to retail and or comments two tease quick more the demand. just ones. I your first, a did net much And comments I out that? impact

I think it remains said you fundamentally strong.

of retail you're -- in specifically weather talking in you're July the be would about guess your think here just excluding trend? and June context Any impacts. terms color in assuming helpful. are what I But I there

Todd Cleveland

the for short-term Yes, pretty and and of here Brett. consumer, about and commodities, good cost OEMs much half overall, commodity from industry to good of it led overall in side. for the the We've prices in reduced prices organic major talk lower first our the the headwind I'll the our lower year. is seen but that's does reduced first commodity And so perspective. all organic to costs create

so our net low industry quarter digits at the an organic were pricing positive negatively of was the basis growth related impacted range. organic we X%, to single for on in plus And X% X% but to

Andy Nemeth

Brett, this is Andy.

retail net it, absolutely seeing, weather overall, correct been demand, call half fundamentally demand. of on We retail the On the think fundamental year. strong side, headwind still retail of weather. But has first the again, a in we're

units about still that and indicating units. are touches excitement lots, there's still the Our RV industry at off moving are RV dealer they're still selling the shows and

But headwind. -- moving. are saying of a are that, again, was that units it think we absolutely our we net are So touches

marine that boats. Marine excited content content. in about space up their well. as And Consumers wanting are the continues still to industry

Like and in -- our the there. least we so, the north what marine between our touch customers again, And all in bifurcated south, in it's seen we've demand we're I space. And seeing really the the businesses. in at fundamental said,

we've got platform. So nice that a mix across

but So I space. primarily the like still our there's seen and said, Southern pontoon where for North in demand been had That's strong very in that aluminum products weather, fish. and the operations we've strong

times the to more frame. the alluded of shipment had then a we've I outstanding level I'll company our in within number July specifically, in time own company, transportation past an that touch And Brett, guess

demand -- so the need on to And have to to us, that's lots. the and strong an dealers that bringing bring are continuing indication units

indicators, positive of as July cleared. particularly So the lot and good weather late a in June

Brett Andress

here parse business, I much And could can lot a of kind of, guess, about much aluminum stable any say, how other helpful. out -- way of I it's boat of goes marine. one of want some is either growing pontoon there into categories That's marine I bucket -- if business because based on I'm recently or to industry? in and your fish just in the goes into squeeze more Understood. more content. you versus the How your marine or

Joshua Boone

in on little When saltwater a very We're talked think boats, you center Andy boats wake, the had pontoons wake ski Southeast aluminum And to pontoon out. maybe lot if not that, we and saltwater content region boats. would to just there's and center if it the and about truly fish. really had those a and boats, Brett. say, There's console content that of on the lot about powerboats, of -- break XX-XX XX% console, we I it, call then ski fiberglass

Operator

question in comes the Steve queue from Sidoti. next O'Hara with The

Stephen O'Hara

Just last from marine. it some up I'm curious profile, half a down know had So about year, that mean what's I you the the I comments kind good, just know typically? sequentially. but of year, terms back the in of would business? wondering was pretty within maybe typically I sales the second for first year-over-year seasonality expect you what of acquisitions half, half within

Joshua Boone

boats not seasonality is QX then pretty side in as retailed and that's XX% normal RV softest flexed usually Yes, Steve, from year with pretty the they changeover, first half XX-XX, And QX QX. the ramp QX obviously in seasonality the it's the model significantly season wholesale with for part second traditionally Josh. being Probably off as year. It well. of up up model RV but with in half. QX kick But XX%-XX% the off they follows the most versus new the the quickly terribly from strongest

Stephen O'Hara

Okay. just XXX first think operating of you the looks and think I It that margin you And side, of in basis year. I had the the -- year-over-year. that margins were I comments half most your down said about on would be then points occurred about talked know like cost

modest improvement you're sales quarter guess, being expecting high that that should looks it up -- costs get stock-based things quarter. It was I and is the or wondering to lower with significantly SG&A, some, kind in and like up what the keeping decline less. in at line in comp? I'm about pick drove wondering mean on get just talking Or up? I'm of maybe are costs or X% I the down just should first SG&A least was the You given

Joshua Boone

that with referenced and distribution costs to unit. we is distribution our overhead Yes. overhead overhead our The the related majority of in the business gross elevated margin

focused variable flexing in -- other right in highly the the components We it as a and onetime see and the control expense but line. continuing on we're compensation, anomalies that related that versus focus a down then to It's environment wasn't But monitor within variable cost to SG&A did there. QX, component no far really cost control stock SG&A, As during -- SG&A it's we're line. within item. now expense the relatively variable did you on any come

component, be the to structure margin side. and on overhead going gross that's from the on above But line the distribution

here that's we're we'll the season show so point revenue alluded, this a area relative And clarity get where lot And the of as Todd slightly at out more elevated fall. in in time. the here to lows coming

Andy Nemeth

And Steve, this is Andy.

On the lot overhead a of to that's above related piece, labor line. the

things standard improve. maintaining, That's call as hours workforce. flex we certain see that to it, maintain our we're So up can flexible, very

of bit little we're where excess the carrying a overhead line. above that's the again, So

Stephen O'Hara

of the going forward. commodity relative kind just I like And comment have, to the assume costs costs would commodity improving profile you that, guess, I things and to Okay.

the negative it lower that of there more given cetera? alluded thing But XQ acquisition. obviously other of pressures the have to the et sales, than in the Is than is from XQ that what you You timing are I year-over-year or other a just LaSalle, that? guess, maybe overhead a

Joshua Boone

Yes.

workforce structure, I in think foremost, and workforce volatile our the in in investments volatility that balancing now, -- overhead markets have about space the and and Andy with our side. what the balancing revenue probably revenues the that the the that the right and maintaining first talked and we

and And associated customers along across-the-board passed and with with really partnered our pricing we've we've that. commodities declining so seen

from there's tailwind a not a perspective from headwind really cost that So or forward. moving

Operator

next Instructions]. from queue [Operator The with Fargo. question in the Wells Tim comes Conder

Marc Torrente

inventories for are Are Marc outlooks. year? the assuming on corrected. is the Torrente market XXXX wanted Appreciate end clarify stabilize and This these on of you in But expecting normalized next grow margins actually each just color or to subside of market's weather the some actually to all Tim. headwinds

Todd Cleveland

expect growth, Marc. would Yes, we

as RV remarks, inventories retail inventory. this as you year, in about a big mid-single in Marc, gap, prepared down So of double look with pipeline down yes, and digits, if retail the coming of wholesale low wholesale his Andy at there's talked what's digits out being

on even to pretty we to retail. bump just on wholesale so get flat down producing wholesale back expect slightly basis one-for-one a And with would retail substantial in and on to XXXX, a

mid-single next be could again expect an retail increase would so digits flat-to-down And still year and we shipments. wholesale

Marc Torrente

Okay. actually to that up next But flat on or the you retail expecting year side, are be then?

Todd Cleveland

Andy with alluded the macro up all the tailwinds expect it environment be to. We'd and all to

Marc Torrente

was then side? remaining carryover. QX is impact that And there then in Great. the on cost how inventory having anything it You called in had on QX potentially and the And basis QX? Okay. much some

Todd Cleveland

we headwind issue Nominal QX, an so not it do no, a through it forward. we where Marc. expect to We've or from moving sit and today, worked be

Marc Torrente

And that into year? XX rebound then see you at margins we Great. target XXXX, each the to basis a looking points can Okay. typical above XX

Todd Cleveland

Absolutely. Sure is.

Marc Torrente

Okay.

lifted, were expect a then of you to benefit would that? And how see Okay. if tariffs from much

Todd Cleveland

XX it, is to environment the our XX first rebalancing, hampered for the us us. on choppy, our structures certain maintained for that's extremely basis navigated We've cost weather year business. an to call the This half that modest the RV the profile, of year. expectations stable Well, margin volatile through points, has and we growth been

say be to If XXXX. So what to basis for XX I XX would expectations that. a a would our could exceed in at we environment, points we're is stable minimum growing

Operator

with CL in the King. Stember Scott from question comes next queue The

Scott Stember

question was. for what follow-up a net your, industry you us with the just you Just gave come decline just so -- the up sales guys, organic -- decline the we of decline Could within tell a quarter? was is industry what that on

Joshua Boone

Yes, XX%. Scott, around Josh. this is It's

Scott Stember

the that organic That was guys was the or net you number? for

Joshua Boone

all Organic in. was XX%,

Scott Stember

is ratio Okay. of the And quarter? Got the it. the where at end leverage

Joshua Boone

X.XXx.

Operator

in And have the queue, question Craig more we one from do with Baird. it Kennison comes

Craig Kennison

innings the you're necessary. innings for kind marine It It destock, the more based the Brunswick prepared the business? areas on like destock that? sounds the Is of business weak How risk you the may not the as run said like that as where have but on of horizon this you in exposed seems what morning, of a RV a be to of some destock. we're early had in maybe later

Andy Nemeth

half we've last are on reacting and that second don't that's is expect the split really kind marine the marine situation, short-term adjusts but the industry two the that adjustment they industry regions, to seen a Again, say, of the would Andy. we believe very of destock. RV it's We kind this to wholesale quickly. between we we side, Craig, expect the but extent

adjusted they've proactively So already June. in

bit sectors little mixed overall, a through performing we But that of seeing certain kind third head into well. the we've said, we're as industry so still of are And business like and a model I quarter. marine very got the

And the we've part inventory it, We just has are again, -- the wouldn't that and are retail we because like reacting are missed to much already is the taking strong think they been noticed destock. of weather's call towards think season latter an reduction feel that inventories this the with nicer place much, seen I July. we that retail as here activities half some, there. been the latter But don't they -- extended proactively And the weather. really

Todd Cleveland

we've very The as take hours, like the labor And so -- I'm other over going much flex force we're of Todd, accommodate, high easily at just and do themselves. level Craig, industry, some do a they last, the very costs marine things long going X.X been to very add, year that out we X years, our rest the industry's recalibrate internally. to we're working move, I'd as things can been to say, to this same is X and years. our flex And operating

Craig Kennison

unit on? to Is there could are that some where marine, needle In the with go? or you is a white a metric respect frame your space category where good tinker maybe there move then acquisition? two could And opportunity through you per in And where think you content particular, today? or we could

Joshua Boone

Craig, is Josh. this

$X,XXX potential the we're we per unit per unit. into, at in have content the year-over-year. And per look $X,XXX we categories of content product we're On content unit, XX% over over basis, selling on that we're -- the if today $X,XXX over that up

content So from market stages share still and really organically. early growing in from the a perspective

Andy Nemeth

is Andy. Craig, this

product opportunity to there, love that relates acquired, space, the from it and Josh the love noted, tremendous top our categories a of content white strategically. we a we've both space. perspective amount As there's marine as in organically and We

excited about marine we're So potential.

Craig Kennison

on that. up follow to just And

that of some last your nature come way? you've yourselves the has that have in years, As the established changed marine couple the opportunities in category the of of

Andy Nemeth

platform. have compelling has. it pretty yes, a believe we we've, guess, mean I I again,

and I looking phenomenal think some again, we're it. our about and, presence to we've with excited companies forward partnered

the continue we marine in space. opportunity think I see to

Operator

Okay.

We questions this have time. at no further

So I'll remarks. turn the call Kotowski for over to Julie Ms. further

Julie Kotowski

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

Operator

thank for and gentlemen, This concludes today's you participating. teleconference. Ladies

now You disconnect. may

Patrick Industries (PATK) 25 Jul 192019 Q2 Earnings call transcript