PATK - Earnings call transcript Q4 2019 | Patrick Industries, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Patrick Industries, Inc. Fourth Quarter 2019 Earnings Conference Call. My name is John, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. that is note recorded. Please Instructions] this being conference [Operator

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

Julie Ann Kotowski

XXXX to call the by CFO. Andy CEO; Industries’ welcome joined and today and President Josh everyone, I am morning, fourth Good quarter and conference Nemeth, call. on Patrick Boone,

factors, in under press our the actual Industries the in many These are in could with a may be that operations XX-K made, except reflect statements We identified in Securities made the and its are our required are beyond the are Exchange today’s Certain law. events or statements which factors to events no occur these those statements. cause There releases, forward-looking of conference statements differ other the statements after update the and our number date which by described obligation laws. call Commission. from forward-looking circumstances to materially filings XXXX of Form results and regarding Patrick undertake control, to securities for year considered the as company’s ended and the forward-looking

like Andy over the turn Nemeth. now call would I to to

Andy Nemeth

us call everyone, morning, thank you, Ann. Julie Thank Good today. you on for and joining the

to our years our has been legacy as a humbled by Before to Chairman his the Todd’s members for leadership passion and I and that to of like our management with predecessor all team part I our I’m strength I’ve we continuing be XX and begin communities, Executive and dedicated and our fortunate company, been friend my a the the and Todd Cleveland Patrick to customers, and personally forward work industries and all members. and members he and both past the of Directors, prepared during team to plus journey together. witness of thank talented serve. family X,XXX our team member the management of and we team to team our of years, inspired my our me of Todd continue Board for our remarks, I’d over his and our Board look and truly our mentorship

adaptation as that XXXX a fluctuations rate interest manufactured us both which impacted volatility. with in the for in of significant and year our markets, commodity was the and volatility as set to demand execution prices, marked and marine headwinds, homes ability it in issues weather-related in the as market included primary well markets RV housing filled

these full year prior increased in of recalibration our are of we revenues lifestyle ability our quarter despite wholesale business. manage inventory quarter declines digit $XXX double with due headwinds, pleased fourth and to Fourth shipment and X% leisure markets. versus to million, light and In year our flexibly performance nimbly the

Additionally, we organically a grow on our year-over-year per basis. and each continued sector content to increased market unit in

Our of fourth with quarter Full diluted or share. increased $XX net share. approximately diluted well or million $X.XX per $X.XX was as X% $XX XXXX revenues net million of year per income income

full the RV in year marine overall XXXX XX% the achieved our and the X% our X% of for and respectively the XX% Bristol, realized included and an year, net million $X revenues. realize of nine declines completed annualized We including acquisitions are year XXXX XXXX in organic additional integration quarter of where in of full XX% which in following: and despite year a during Execution synergies goal delivering shipment wholesale LaSalle for XXXX. of markets we’ll million of $X The track the highlights for make which our industry on on we growth and up in of executing we we $X million consolidated

customers. pause decreases $XXX on double-digit We were lower to flows, a year share structure, included or We addition, the We of $XX half cost our prices our million first executed offering. launch per operating commodity we $XXX during $X our successful half We disciplined annually. million industry to more in trajectory totaling bond fashion pricing markets. after during the in acquisitions which the each two the flow free of our related high-yield second assess generated over in on on over cash our initiatives the the reduction partnership in of declines and In leisure strategic passed completed cash million of enhanced fixed of business. year through capital lifestyle than

maturity dry of comfortably powder initiatives well positioning absorb five credit the economic or restated to necessary platform its further Our facility related and years, execute with and and as our any another amended volatility. on strategic for and extension capacity our

and that additional calibrations we our to the fourth lifestyle the taking with quarterly place quarter. through And returned Overall issuance policy XXXX. shareholders in began capital momentum adoption our secular industrial evident and had of markets housing dividends dividend of the in both leisure in our and been the appears

On lifestyle RV fourth year. both front marine management markets the quarter fourth of for revenues, dealer strong XX% back represent disciplined quarter in collectively was of half and these and the inventory leisure a the encompassing which focus again

half rebounded further to first weather Our reductions rate in weather-related the XXXX experienced of back and markets XXXX. conditions half interest quarter industrial the representing from housing fourth in XX% of as of improve issues cold and the revenues

I will additional an now color core some provide market serve. on update we each and

quarter wholesale down were or X% revenues million in X%. down were $XX shipments against RV that the unit Our

year unit shipments full RV wholesale the XXXX, XXX,XXX XX% down approximately were units, XXXX. For from

relationship year retail and digits inventories driven down through to continued return be for be come direct have to dealer and for positioning shipments sales XXXX the industry to between selling a after more unit upcoming Retail estimated the full for mid-single unit shipments the season. are adjustments final wholesale down unit

more inventory the since second there a of destocking wholesale between gap XXXX XX,XXX out we production than been began having and units and to estimated XXXX. more in have than retail of quarter The units is for the wholesale be shipments retail XXX,XXX with outpaced estimate taken

Additionally, have hand of weeks been more using from based than end would since and more weeks XX% out unit XXXX that estimates, on by this this of the shipments retail on than time. imply same taken on up XX our data that are that XXXX inventory

wholesale full resilient mid approximately leaned as even wholesale on in Inventory almost position with wholesale this period, retail currently levels XXXX well turns digits. increase in assuming XXXX production and intact, during RV as XXXX; high or remain inventory single XXX,XXX from remained Based increased the this data see the out for turn XXXX. noted a approximately we of shipments units XXXX could time have down reduced RVIA to however, a is demand decline estimating inventories and turn to X%

throughout shows in has dealer and viewed Regarding retail reports as demand RV Tampa, indicate record potential selling that attendance for a been the the particular the retail early experienced buying have country initial XXXX gauge demand which Florida levels of Supershow including strong RV held season. the in new

the ultimately looking decontenting a This seen those looking have of to certain slow our unit reversing trends as brands as units unit. up-contenting we will potential upgrade. and content add per to well to buyers with of taking their Additionally, place differentiate

wholesale in the data As through at the up progressing point. indicates production February show first quarter to dealer through are XXXX, this of be retail we season RV our

we significant in shipments were a which on OEMs of quarter anticipating impacted weather, challenging categories. first declines work shipments in of partially the dealers inventory of aggressive of saw our in recalibration light the in Based in XXXX, by to the perform pontoon of in collectively first marine aluminum year-over-year we the business parts the environment XXXX. first current date to inventory negatively weather first half the as negative particularly growth quarter in impacted and quarter The on in and concentrate are to run rates related continue that retail, primarily well in Northern year to of fishing together the country destocking side

wholesale were and consolidated Marine the estimated $XX revenues approximately in to and down shipments quarter our be million XX% XX% or fourth marine sales. to the prior declined represented to in unit our XX% of compared power year XX% the quarter book

unit quarter, pontoon per shipments, generally about in the for quarter Our organic X% XX% ski both and an of increasing year retail up XX% and wake full of industry. quarter Marine and of the result which both with as growth estimated rebounded represents net fourth the X%. content increased a strategic in each

depleted shipments Production with boats and approximately retail rationalized inventories quarter for be fourth the result quarter XX% retail and remained as marine for continued levels the down outpacing were basis. soft of to fish as appropriately a appear X% wholesale. be unrevised Aluminum the on an in to recalibrating year

for XXXX. and the We single be wholesale low expect down shipments retail double in shipments mid estimated to year full digits digits to be down to

early see value-added to long-term continued inventories on Miami pulls of the the and OEMs are year. and single were mid offering held we for down continue year Show XXXX, expect first recalibrate we improve quarter part to of signaling retail the content the the of be the the there in Boat dealer marine and half in and as first expectations week half back solid the shipments wholesale this positive held to fundamental as innovations shows more being in For digits boats Marine through demand.

one design customers Florida, and marine their engineering tremendous growth strategically ground put brand and offers capabilities In creative they solutions product sales the centers our the design studio and model for from our as an to and bay our launch gains Sarasota, up. existing stop studio place engineering design platform, models located initiatives across share addition, our marine promotes several including center. in similar and design showcases market Indiana and and and This our shop that comprehensive have our build studio innovation, engineered we new offerings, in broad drive and of Elkhart, innovative showroom full

the from these related in issues and of the business, both XXXX to side from tailwind industrial half a markets which declining and interest turning Now that rates. rebounded of the of to our impacted first housing weather-related

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

multifamily to buyers more for year increasingly housing XX% patterns XX looking per continues olds. need demand the remains strong markets as The growing to to Our unit rural both first time is demographic demand quality at are in growth and as with and net the in leisure our created up be both the of industry. seeing are from and XX organic Pent-up older to to areas. attractive content expected downsize generation lifestyle strategic MH and market result indicate and we intact into urban growth housing population a the consistent population trends of affordable of

units wholesale see in MH we stick-built For business, the overall the XXXX, prior excited mid tailwinds MH our housing. prospects which the manufactured and overall the year. single are experience XX% digit in fourth to we quarter mix in in long-term increased represent industrial year and X% the continue sales space anticipating as to of the compared our full currently growth remain about and both in Revenues

This partially homes attributed in to rebounded was housing over for reflecting prior against the the the backdrop of fourth of and with in the quite a nicely XX% drop increase supply existing rates which benefit year quarter, period tight mortgage new extremely a sale. starts, the

starts a to generally generally new new housing four are products Our to the six months. unit trail into go last and by

X% South strong multifamily side and Single the high-rise, primarily in housing XX%, our quarter were is business, XX% the Western institutional in respectively. commercial and while rose furniture The XX% starts nonresidential industrial of construction up the which focused and in housing quarter. markets hospitality, the family with up fourth were regions starts

markets the brands scale market industrial drive place continue new in to penetrate capabilities capabilities resources. support leverage to team brand industrial to initiatives products expanding several to sales our leveraging and have large that and to our We include partnerships centralized industrial

remain showing is cost digit lifestyle on teams in all housing with in XXXX which markets to improvement will market are commodity in customers demand anticipating the and supporting and and are leisure in positive. continue nimble are now both tailwinds long-term focused and on overall synergy currently strong of growth both mid starts position new operational growth. flexible fiscal markets These partnership about end the housing to for a combined tailwind to to return been trends and industrial Demographics share we declines housing line. of Fundamental growth rates and Overall, year. Secular driving and fiscal strategically low our interest we’re and improvement our signs our gains, realization, for overall drive our optimistic has single and and top are to bottom company positioning passed XXXX. XXXX

half while full On candidates in of our the the calibrated, the fashion continue our acquisition year, cultivate we primary pipeline of in first all actively acquisitions markets pipeline markets. our we to XXXX and of a disciplined paused front, have while spending

targeted primary Pacific high focused remain quality markets the Northwest. in strategically December, in the most strategic of and located the acquisition We recently completed late Counters, on industrial manufacturer acquisitions a space, value-added our in countertop in Topline

pipeline We are our to our very our we it in be will primary model. constantly and about new are as when markets acquisition opportunistic acquisition to excited and prioritizing comes discipline exploring continue evaluating and opportunities

to expect companies the drive years. to also continue the few we from We last over synergies acquired

with added and allocation arsenal dividend acquisition repurchasing dividend fourth XXXX. In further declaration more of strategy, shares cash a than to addition the to policy in we the our disciplined a our the on quarter stock capital XXX,XXX of of Topline, a common of executed

consistent generate growth geographic and shareholders to acquisitions in with opportunities loyal driving and capital of a our solid position, strategic repurchases and capital which the cash ability in on share strategy, dividend investing us our allows quarterly and flows through allocation to with organic our the coupled includes and strong balance strategic Our addition execution reward financial expansions. supportive to expenditures

And additional some to the call comments provide who financial Josh, on I’ll performance. our turn will over

Josh Boone

Andy. Thanks,

for MH marine in $XXX the which and industrial industry to sales and and net markets. partially quarter consolidated were Our growth reflecting increased declines industry markets million RV fourth by X% acquisitions offset the primarily and our

continue strategic initiative new and on regions. to and penetrate drive we focus to On geographic line, growth the organic top markets

market, which decreases quarter, the second significantly the XXXX, customers. of we and fourth of along fourth despite net were to X% unit, year. the pass quarter of per the Revenue organic both comprised two of In in again growth full For quarter revenues per decreased and in million able XXXX. $X is marine content $X,XXX and X% from respectively acquisitions RV pricing XX% XX% increased to approximately year, to approximately which half and the to completed we to unit unit. by with lifestyle commodities our growth drive leisure RV X%, estimated markets, marine of the the unit marine $X,XXX per industry and increased and down lower content RV revenues X% compared per contributed strategic

XX% quarter housing Revenue per XX% to from content industrial MH increasing year versus and increased with prior and the our XX% unit MH markets $X,XXX the in unit. revenues up per

Housing revenues up first momentum to started. Generally, this impact homes expect at into six put four the to the the On industrial were We would started were after time. that our products be starts side, in were quarter but products fourth second in increased the our quarter, the X% they in new the fourth X% which are quarter months quarter. housing see starts in going the to XXXX. homes would are the in half down XXXX, strong XX% of of of and

points impacted both margin market. to year, fourth XX.X%, which and declines in RV quarter primarily prior by the basis the Our declining marine was XX was compared gross in the

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

of compared the expenses quarter SG&A SG&A quarter, XXXX the to million reductions were effect. strategic in $X saw were sales take our $XX year. expenses impact third point X.X% the million a annualized as of to basis the decline XX of we compared down cost prior

quarter XXXX compared margin in operating decreased points X.X%, year. prior basis million Operating the year. The to to XX $XX quarter compared income X% prior of fourth the fourth to the declined

and quarter in year the the cost of declined part reflecting our For recent volatility the dilutive we significant points third execution provided acquisition, earnings the during margin full in XXXX, operating offset call, and our reduction related range basis was by in primarily to impact related declines acquisitions. of the volumes XXX to Bristol synergies which margins industry LaSalle our

$X.XX, from per net prior $X.XX fourth XX% the year. share in diluted the was Our quarter down in income the

Excluding compared was in the down compensation fourth income per of $X.XX quarter our XXXX, to XX% of share-based share benefit the prior the net of year. diluted

reported for tax and and overall XX% as fourth Our XXXX full rate XX% with quarter effective respectively. the year

year estimating XXXX, to the are items. we impact of XX% full For one excluding tax all-in our time range rate effective in the XX% be to the of

from capitalize the XXXX, both initiatives into of to As continue driving benefits growth. industry expect growth we organic growth on strategic we progressed and revenue our net to

trends heading state in stabilized, normalization expectation drive have markets markets. have our all demographic organic appear It that a primary overall of return our strong is XXXX. commodities can to core our of and As be we into to revenue

momentum the ample should Additionally, demand our is with ability appropriately to current and above The structure strategically additional our expansion capacity support see to quickly provide aligned with to positioned on XXXX. margin the we the will levels of and the taken in cost expected year current execute end combined volume is markets realization of in with the stabilization XXXX up actions flex organization forecast. synergies levels significant and throughout

XX a we market range outlined Based RV of upside upper wholesale RV at basis our wholesale assumptions basis the shipments market, would improved XX expect that. increase the end our and the of on potential margin operating Andy to points if points beyond flat with to

to Now, sheet. the turning balance

completed debt. after the reflecting down net senior assets from million existing total offering pay Our cash notes of of largely we XXXX in recognition the increased approximately proceeds $XXX September

average cost million returned XXXX. In As total shares a capital included quarterly $XX XXX,XXX at $XXX and XXXX per flows approximately end of dividend of the shareholders, for which cash of share the of capital of we million first since of cash fourth in previously $XX million an in million approximately stock invested December. our the generated at we and our repurchasing quarter, price operating common approximately to approximately of expenditures noted, $X paid $XX

Our This million provides the cash plans. flows which currently net times. combined strategic dry to execute leverage cash continue liquidity we to operating including relative And X.X under hand. XXXX end million the a our to the to was growth $XXX be available of powder on us with ongoing flexibility EBITDA on in fourth quarter about $XXX projected is over at position with

business year order full investments that the sufficient support will For in our strategic maintain volume capacity to can XXXX, to in disciplined continue make we expected levels.

year of projecting expenditures the full For capital XXXX, we’re $XX approximately million.

That completes remarks. Andy? my

Andy Nemeth

Josh. Thanks,

As and macroeconomic towards we momentum XXXX, building we and and lifestyle Retail leisure that markets is supported demand our demographic positive housing for by industrial both tailwinds. look and trends remain believe primary of in secular all our markets.

We what opportunistically model upon based to best. on our close and have that staying our and diversified we we strategically business expertise and what is know do and building strengths

line, businesses, and grow members top the execute and to talent, a and ourselves dedication alignment plan continue communities performance us position foundation, and We have patient bottom with on growth combination positioned financial our both oriented to with and our that team and strategic will capital culture members in powder capacity, a with and expectations. strategic to passion reinvest customer capital operational exceed us dry in runway first than structure X,XXX plans. rock-solid deploy our customers’ our of right to team our more The of allow will

of end the the and on quality, primary towards opportunity value. we our to markets look to us of customers, the XXXX is we remarks. Board partners we brings receive providing in serve, shareholder of affords prepared all shareholders of closing, ongoing banking and level the service focus from highest overall it the and goal our our continue support the suppliers, In Directors, opportunities This

to now take are We questions. ready

Thank you.

question-and-answer King. is We begin Instructions] session. question [Operator will And Scott CL the Stember from our now first from

Scott Stember

morning, thanks for questions. my taking Good guys, and

Andy Nemeth

Good morning.

Josh Boone

Good morning.

Scott Stember

talked know we’re have on you maybe from maybe, RV the how month Andy, level and their by Can conference cadence about least don’t one seeing up the far also? customers or from side a of at standpoint. things the your size just I call an order top competitors on good been so their that talk increases about of the

Andy Nemeth

we Sure. and on it as our pretty our some Based data rates detailed customers. with do to tracking relates production

based was seeing digits. on we’re We’re up anticipating right January at what now double

up two I single double think up for February to first single months, low All in the we’re be digits. digits. digits is high going to

So production little There's some year have ago. impact there of – improved. bit from is weather a rates a

but So we we're tell in again, rate we would now, a February. and mid- high-single-digit that to seeing production both January you that increase are right

Scott Stember

later it. Got the just the RV higher the side, XX hit end Josh, on that, flat talk in of of to about Should to margin being the Maybe able of little seeing maybe XX expect cadence talked of environment to the sense about should would quarter? we Just get you a trying points start happen expansion. that? year? basis And how that in we to this model? the Or first bit a

Joshua Boone

Yes.

I to think well prepared margin able our when be we see remarks, XXXX, to like us positioning is expansion. generate XXXX in solid

on current So see of flat being talked the up should the based we our range all as XX side, would to next flat potentially XX if on think And above we exceeding starting markets, of in we of year, in out basis RV be QX, for with points. points. the that XX about, upside I to forecast, gate end basis

Scott Stember

based maybe I to levels. about start touching last expect decent back Got like down order appropriate just to start retail that inventories know we some just looks side? the news sales, pick one market have that on come it. time, When seeing we've got up should pretty And Marine it to on and intake

Andy Nemeth

first the quarter. probably inventories bring second line. things very customers inventories work our like year good second that Sure to towards out will together of have in We're quarter together We're is The really We're year Andy. through closely Marine feeling worked nicely. end and of Scott. expecting – very calibrating very the calibrated really half be of into inventories dealers the the manage – on to the today. closely side hearing This the that and the manufacturers latter are appropriately last

the right be a but of up half the half estimating of just wholesale we're first bit, picking production So year year. back the now, little down to in

we think again, they've So done great a job. that

are We are continuing retail, positive our trends their boats. and to up on content hearing customers

feeling now. right So good everybody is pretty

Scott Stember

have Got it. That’s for all now. I Thanks.

Andy Nemeth

Thanks.

Josh Boone

Scott. Thanks

Operator

next Our is Securities. from question Daniel from CJS Moore

Daniel Moore

taking good questions. Thanks for morning. Josh, and the Andy

Andy Nemeth

morning. Good

Daniel Moore

Todd, And success listening, somewhere the you're you to you future all there best help, on in you if all I want very quickly, your thank and wish tremendous for the congratulate endeavors.

know you. seeing I Although be hearing and from we'll

or how you high-single crystal being the Andy were flat down you that is is that digits? be wholesale you're on the talked to to year based entering RV your Josh, we'd ball dealers, in mid- about seeing year of that to out? your shaking best up see down even expectation mid- this terms conversations with if stage, high-single At what Or do retail retail, digits.

Andy Nemeth

XXXX that lower this now, we math about, Dan, inventories, Absolutely, Andy. level talked more again back they and there, XX% Sure of are of out on is our that are the retail based than in right inventory on the level turns demand. were

And at think looked we've so high-single-digit could as on and be wholesale to to up high-single-digits done calcs, retail. I like it, declines we in that said, mid- our we based mid-

of the year. and a the to expectation is at we'll new reasonable We're do turn be first get part I that this in really the standard, we new feel for demand. feel point. think So going a hearing The like that's solid so here level

said, expect up on that That opportunity to we turns do the those up to retail. gone definite there's have being historical think would match we periods. with wholesale So well from side

Daniel Moore

realistic retail. belabor the X% single to perfect absolutely, do think you makes No, just specifically? Do point down math I more the was to digits? is Or more think you to flat focused we're sense. Sorry high down retail on a expectation? to mid-

Andy Nemeth

in sales of No, would to unit flat on traffic the well, as up news are now. you think sales is and that than down is the We're hearing Other retail pretty are mid-single, we a retail right up. spot. good hearing We're we good good We're hearing up. feels shows. tell trending

is So the from point our side. retail everything perspective positive this at on

Daniel Moore

that high So just single were we're the that. down I starting wanted the not be case. if clarify year to digits to

Andy Nemeth

believe don't We so.

Daniel Moore

Any that decontenting, then ball be RV And content well. what type of or helpful. might to this as both be year? you in Okay, out crystal achieve seems expectations and growth flattening for able to Marine

Andy Nemeth

really the the been think certain in point, from at looking out. to contenting seeing differentiate stabilized. decontenting has their definitely We that units have up taken And we're customers content this fact,

actually of little kind we've a So a of seen bit shift.

So the that looks of starting start it's happen. to like

estimates with X% of to of to is continue Our things. growth on organic about think how industry top be kind we X%

and like valid we So are achievable those feel targets.

Josh Boone

and to to impact Marine, bit add the side, in Yes to continue and Dan little probably recent range. unit RV Schmitt that just on double a color low- to on be acquisition Marine additional we additional the mid-single-digit share per Marine G.G. to of the with grow market expect on digits the content

Daniel Moore

ones. rate, have conservatism? that expect to that recur? up? some little discrete benefits Perfect. Is Couple sounds Or won't housekeeping tax tick we It you this of like year did

Josh Boone

not there's regarding benefits expect some always in QX to year-end discrete at had We taxes. we do some pieces moving reoccur, that but

now year ball excluding items. right be continue crystal lowered over is that So to XX% discrete the in of which best XXXX XX% those for XX% range, have impact we to our without to the items, the full

Daniel Moore

how in the it. roughly GAAP for more, continues relative cash Got grow one of to terms of earnings that, that is for I much cash to D&A earnings expense? XXXX to do amortization be continue is the what – we and you given GAAP? then acquisitive, know And continue expect

Josh Boone

D&A Yes million side $XX we’re so million for on $XX XXXX.

Daniel Moore

Total?

Josh Boone

Yes. And stock at $XX million compensation. to $XX consistent million the on range

Daniel Moore

of million that $XX amortization have $XX the million? you to And do component

Andy Nemeth

range. million $XX $XX $XX million, Yes. Expect million, in it to be the

Daniel Moore

follow-ups, Perfect. I appreciate the will jump color. If I Thanks. any I back. have

Andy Nemeth

you. Thank

Operator

is Conder question Tim Fargo next from Wells from Securities Our

Joe Lachky

in this is Lachky actually Tim. there Joe Hi for dialing

pretty wanted side. few like follow-up So of the RV the good months just your start year, to sounds since particularly retail on it at the I on assumptions

on So my production retail question able in if maybe a up best case sales example, industry how unit flat like And case is up ramp you'd potentially comment were what look best your to quickly scenario? for to a be ability and do slightly? scenario, in you say, think shipments could then

Andy Nemeth

or Sure, math and expect growth Andy. sales play retail math in this is we on are, flat call If today. would turns, sales it, double-digit that's retail based unit our using wholesale the same in

well, and to good can in ramp Saturdays, we've a work Fridays we're got from as place as capacity ability a we – Our so perspective. up

like to well feel and demand there’s up demand. very match with So we flexibility wholesale retail there

Joe Lachky

input costs? that’s All through can or specifically XXXX any then and for talk this to automation Thanks. beyond? And had to you opportunities And regards you labor helpful. wanted outlook along costs I in year those lines, right, your as if margins, look into ask we

Josh Boone

regarding us decline We in costs, the and of and of passed commodities the XXXX. latter half stabilized, commodities. part the input course accordingly have out movement in first Those stabilized the commodities those XXXX. Yes, XXXX the of so have coming along over for with we've saw pricing

out related impact we them where As relatively no kind today, having tailwinds to look margin from staying commodities. see and we're really of a XXXX, really or don't see we consistent perspective. headwinds for we With at

spot. say are couple On the over years, initiatives at today labor the the of labor a front, given we and last would where taken really is good in capacities that we've

few over have come last low We the years a here to turnovers in point XXXX. down consistently

alluded position here we good perspective And able XXXX. flex to adding a a enter in so Andy without as days as even additional to workforce from we're be up, to,

XXXX. puts takes a really labor or a margin on the flex commodity ability in would side, the with really spot good So perspective, into up to and we is say, no from

Joe Lachky

thanks. Great,

Operator

Our Kennison next from Baird. is question from Craig

Craig Kennison

to your my both good a questions. M&A. great Question plan. Thanks on Todd Andy and on for Hey, you morning. and And congratulations partnership succession taking of

now, great up much And XXXX? and for you? sectors long could you've capital you a appealing then today got for sheet in the balance You've most deploy term. look capital some what How locked

Andy Nemeth

going we're Sure, okay. the our disciplined to of sectors. pipeline for doing Thanks got strategic we've in four very of flows centered. our for our keep we is leverage It capital. plan We're Yes, today. positioned very very to range of how capital evolution deploy we're that deploy comments. is looking next about structure all a great operating much model excited a to so. our and We And that kind the cash like really feel spans profile the in going market acquisition

there's as the look And think each in tremendous spectrum, we opportunity market sectors. of again, we across our so

on now, really good right see expect cash flows, our And look valuations continue manufactured and an will side to I improve, we're with the line come housing lifestyle markets again, as say But our opportunity. where industrial so about good. would particular, with and markets markets Our we look industrial leisure and coming we our lifestyle potential as excited very very MH more in and today, we think would well. in up that lead much to be

Craig Kennison

What Thank the had margin you. XXXX. drivers key then, outlook? to Josh, mentioned outlook for you are an margin optimistic And your expansion

Josh Boone

end be going stabilization biggest think the a is driver I markets. to of Yes our

in the down So as significantly pretty we've of of seen the in year. end XXXX of we pretty half markets down. significant have all RV declines XXXX our in here back the is half were Marine Then of XX%, four first

housing And of tailwinds the markets, both well, foremost. so the the housing, as would and on so seeing stabilization industrial manufactured side as the side, that on in be those first we're the

cost impact. XXXX. that that that, to the with the the still taken addition in benefit with XXXX place million reductions in QX of in $XX have will significant In we We'll recent enacted initiatives we've from year-over-year

we synergies well. LaSalle of corresponding that acquisition that the with that impact have and Bristol fill in XXXX the associated will as the Additionally,

margin XX of Andy basis we've outlined morning that on points, pieces based XX And kind good that mentioned. had scenarios so RV all with put we outlook of when from you together, the this to upside there feel those with the

Craig Kennison

expect in year terms just of it you even in Or expansion? throughout the of would cadence fairly helpful. is the That’s a in the loaded one And cadence, the terms or half other?

Josh Boone

It’s even. We talked half in the the the the not year first being loaded half relatively half other. one the I in about of Marine relative down would back to of year. or say,

higher, relatively is and MH manufacturing. all So pretty much of business Marine the distribution in our mix of side is the

little And back so stronger with difference. I say of little softer a a not the in would but the improvement a in op margin first being half the Marine significant half, year,

Craig Kennison

any hard with have that supply And by to do Josh. chain, regions been have then you to exposure just coronavirus? finally, respect your hit the Thanks

Andy Nemeth

we bag. during New bit a mixed this a though buy and period. always At this Craig coronavirus Year, exposure. do It's up have with We the is this Andy. ahead little point Chinese time lined

an good the also we're It to first as well. on return heard point that this automation coming from are We've the So facilities quarter. depends in back of at inventory through XX% the perspective work rates XX% to time. at

that labor facilities got we've are more mix of intensive. a so And

– out anything we're we point. the sure but ahead making And and don't so We're quarter. this on good to but continue supply, working from certainly we'll looking we're expect today, that planning first evaluate at through

Craig Kennison

frame there terms for how your come of online, disrupted? be doesn't you back of Is could supply us much would downside in really of kind chain just production a scenario

Josh Boone

keep of Andy China, supply the And Josh. at distributed are goods, we majority Chinese QX. alluded It’s which perspective, finished the import given are an From on an time. New our hand excess have in into inputs inventory products, ample on of we with as hand they right any Year, to

so, And to point back at give time, ready point did say, full time. resume state doom-and-gloom in type some to would scenario in at of not we're this if production some I

here what with would on China. manufacturing From We somewhat going some expect have standpoint, at into inventory more but be And we're we'll QX. comes a more to But visibility the distributor looking we the scenario. we're from over It's have through aren't really doom-and-gloom hand, the on planning, contingency weeks. limited few that obviously sufficient on next through side.

Andy Nemeth

This is Andy.

good overly some on We're anything We short to but some some airfreight of supply point. significant on because Just We add for got that. on we've opportunities also at are a charges or a we our freight think side way experience that period a this. additional may just more charges production actually this hearing bit our coming don't of products to time, custom expect chain. our little of

bit fairly manage this would through to of little expect a we mixed but bag, a it's So well.

Craig Kennison

That’s super helpful. Thank you.

Andy Nemeth

Yes thanks Craig.

Operator

from Our next & Sidoti Company. question is from Stephen O'Hara

Stephen O'Hara

Yes hi. morning. Good

Andy Nemeth

Good Steve. morning

Stephen O'Hara

Good morning.

– which the, which kind best to acquisitions can in? going the if today, see back you markets, you you on maybe you had talk quickly, guess, bet Just of where end just markets, would And opportunity I be likely the RV less maybe more ones I the for acquisitions would but candidates versus where see would first, kind assume I and activity? last, you'd then be be am of Marine would probably about wrong.

Andy Nemeth

RV industrial Andy. exciting the really about. market Steve like the market the for I I would western is in say have they got regions Northwest presence in said, new us. leisure opportunities. excited about very were excited We've industrial this market. today our and then we Pacific and We're of Marine the is lifestyle extremely on the country

excited very both about again, two. So those

the side, a little oriented. distribution we're bit more On MH

you if to would I'm and we're candidates, were to continues again, them, of flows to I cash better there. more lifestyle say kind at leisure, but not expect together, I'd rank MH to valuations So MH, industrial expect saying that up we not as with opportunities business improve, line rank see looking and

Stephen O'Hara

that – be, scenario for wasn't assume was change retail, you then what asked, of outlook. RV been there just And I but has any potential this painted could Okay. the of kind terms a maybe the in in

past, mid-single Is of in you have said that down the the in to think low digits kind guys still retail. case? I

Andy Nemeth

on that really That’s based trending the and the that's seen. case, we've

it's So this that down good the That shows. be low said, things trending again, out going of mid-singles will to tell at point. hearing to being us we're

as the hearing retail. high single we're it and relates in far, So increased double to units digits

I we So that upside pretty retail again, wholesale sure. low on we've trending where and at to the seen would today. for mid-single potential about based say, But down is with is, feel I good but baseline, think,

Stephen O'Hara

regional housing, maybe the if to the capture you remain geographic issues starts where it the to then certain strong, or have can your Or side, lastly, industrial guys there you. underrepresented And in prohibitive kind is where like do shipping just in – of you – and areas? national not you're things on is is any of Okay. Thank terms ability issues pretty upside that? on

Andy Nemeth

would it to the on in I in going concentrated Andy. more today is particular This western single-family market seeing that and housing in Sure. relates we're and multifamily. say regions what we're both as

it as runway industrial that's tremendous that a good So see our from there to And relates we perspective. platform.

a I wouldn't those say in lot of we're to So underrepresented. say opportunity expand we I would see areas.

Stephen O'Hara

All much. Okay. you thank right very

Operator

is Our from Securities. from CJS next Daniel Moore question

Daniel Moore

Most touched my follow-ups have of been upon.

in it, organic the XX mentioned QX? months it, Josh, revenue have growth may and/or if contribution what was missed from I You trailing acquisitions

Josh Boone

down so X%. were the for quarter, And our X%. industries Yes, consolidated down were we organically,

revenues for of million contributed ahead $XX and or growth the the plus quarter. of X% industry of So organic acquisitions X%

net year, is lower X%. the organic the of For headwinds in commodity with plus costs, industry pricing,

organic, to So our XX% down is down industry XX%.

Daniel Moore

Perfect. Thank again. you

Josh Boone

Yes.

Operator

is Lovallo next America. John of from Our question from Bank

John Lovallo

maybe home, given skips of manufacturer there into frame the the is content a seeing and little more And questions first-time thank they're better given with as just then the starting the that bit fact maybe with my generations. well. maybe bit than taking Are starting a you bit mix guys, little lines, buying in financially? later same expensive better that predecessor the the Hey a – little the better maybe a first-time and risk you trend financially for buyer up housing? along yes, a that life manufactured stick little in manufactured any moves housing, arguably is Maybe perhaps housing the buyer level off off

Andy Nemeth

today What side. they Andy. years we opportunity the housing would side that and say the of from is very quality being a MH and think I with housing half manufactured is manufactured stick-built improved that This into nice where the are of the with much proposition tremendous the on provides ago components cost value there's price both were going stick-built,

buyers we presence may think but multifamily got know that, balance So that and play some we surpass that our single-family, we with. I that a see – manufactured housing, with in we've don't well both we see can

we anticipate any impact. wouldn't So

John Lovallo

new analytics customer then conservative calling and is and And that's us? that it in suggest helpful. does Dodge that construction data a XXXX Are in would you is anything XXXX. pipeline decline commercial seem your How looking to that's accurate? Okay, because for seeing

Andy Nemeth

We are not that seeing now. right

are we production our about customers feeling they're perspective. from feeling where are good a So – at

John Lovallo

make to just then want a numbers And sure. thrown there I around, of helpful. because bunch that’s just Okay, was finally,

On business terms planning of side, what and exactly in RV around the you your retail? are wholesale

Andy Nemeth

is flat side. We think looking the wholesale metrics that to on we're up today, on RV, the based at

John Lovallo

digits? that to low to does mid- you translate low said from into what And mid-single down retail –

Andy Nemeth

retail mid- the could to high based be down on We seeing think we're that today. turns

John Lovallo

mid- high. Turn to

you guys. thank very much Okay,

Operator

time. Julie no at further Ann I over now remarks. Miss will this the have questions back turn further for we to call And Kotowski

Julie Ann Kotowski

call of to Thanks today's www.patrickind.com We call XXXX first conference everyone under for on to Investor call. forward be you look John. A Relations. again today the replay talking Patrick's will at on being our website, appreciate and archived quarter

I'll back operator. now call our the to turn over

Operator

for and and ladies Thank disconnect. teleconference. may you participating today's now gentlemen, you this concludes you Thank

Patrick Industries (PATK) 13 Feb 202019 Q4 Earnings call transcript