PATK - Earnings call transcript Q2 2024 | Patrick Industries, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Patrick Industries Second Quarter 2024 Earnings Conference Call. My name is Rob, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. And I will now turn the call over to Mr. Steve O'Hara, Vice President of Investor Relations. Mr. begin. now may you O'Hara,

Steve O’Hara

operations statements Good morning, I'm Nemeth, call morning. Roeder, to Jeff regarding conference Patrick and on the welcome CFO. Certain considered new whether statement, and otherwise. The result Andy under of joined laws. and Andy future forward-looking President, as our the events, in forward-looking its Industries undertakes call today's update Rodino, no any statements call this RV; everyone, made today CEO; by securities information, or company obligation may be to publicly a

company's the call that could be and Securities to factors over annual those XXXX, the for Additional would other from Commission. I the ended Exchange the described in the cause report like to filings can results statements with year to differ XX-K Nemeth. turn Form XX, the forward-looking the materially Andy now on company's in December found and

Andy L. Nemeth

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

first to our half our culture. team Together Our of second Better performance members commitment reflection quarter be of incredible and continue and in dedication the a

highly product model, put in increasing the variable focus a customer volatility current delivering structure, innovative sheet, and and margins, end EBITDA strong our business position the of to but liquidity with navigate position on diversified and Our we best operating and in revenue, strength earnings as service QX market our persistent and both solutions despite balance XXXX, conditions. In increased continue in quality complement we markets. cost first half us delivered year-over-year of

a earnings share basis, to quarter consolidated in trailing XX% $XX billion. the XX% increased to second month of revenues revenues million, Net $X.XX our $X.X approximately and quarter with diluted second on income billion, $X.XX. per Our were improved approximately XX

adjusted expanding EBITDA Our grew basis with to XX.X%. $XXX by XX% XX points margin adjusted million, EBITDA to

are more at certainty environment. both now our markets, based a until result the we across a as the Jeff levels anticipating the detailed later continue commentary more recent inventory rate will in-depth discipline this to OEMs As achieved leading in of is of we Andy call. half provide and strict back end on dealer will the from look OEM discussion year, on our our the markets, in and and analytics that interest

However, year. we longer-term that I highlight to want of themes half foundational X the are Patrick the key to second enter as

business nimble, with have our higher revenue resilient First, diversification the a as of markets. our in and we of management investments, more and earnings and each margins result potential efforts cost is power strategic made

half and acquisition For of results. instance, positive market. Furthermore, helped the the the of RV a lower the is XX% has from revenue total XX RV XX% just since down that current RV then. almost despite XX% CAGR lower at In represented years ago, is revenue, a increased approximately which of CAGR initial through XX% demand yielded first and XX% in since wholesale our our total shipments has expansion outperforming period, fact margin-accretive grown has from Sportech XXXX. X% RV the stronger market at already TTM our year, expectations despite the RV our business a marine offset from in and in revenue being revenue XXXX, represents recent Today, the powersports housing our RV markets revenue,

enhancing are services solutions Product our Advanced long-term our we product customers This our businesses. and to recently and Group. Second, prioritizing launched value-added intensely our through to bring innovation near across ability is initiative

offering windshield further customers. ] glass in suite launched a market, example, an a potential, our enhances recently of Gear industry-wide solutions As our With powerboat full and debuting Glass, solution in [ the we ski of windshield production premium wake began this marine our and for market.

third, have will coordinate markets. And collaborate, our across to power product key model, Better our end our incredible in each and best and brands ability synergize of growth better Together our with the portfolio continue and been with our leaders practices alignment now component to our solutions plan. of network other initiatives acquisitions and and strategic visibility communicate, business be possess in With a to

breadth Our pipeline cultivating improvement. acquisitions past of intent deliver and completed tremendous and deals, talent remains solutions, consistent to and our consistently customers, has organization. continuing growth new the robust execute offerings and we the of our evaluating to to expanded profile, and have years accelerated produce our with over model full our slow that introduced have existing and we XX our small, steady are The the large us both enhanced to us margin brought on product deepened margin relationships, the helped

maintain Our as advantageous opportunities management present no to a inventory with allocate and strong maturities available until of has we to resilient $XXX major prudent financial balance remain million, capital sheet, performance debt liquidity us poised enabled XXXX and themselves.

opportunities, customers Our of cash cash all positive the while to and control and repurchases. In opportunistic our the and turn strong continue the returning nimbly Jeff demand. I'll who retaining to our invest tailwinds highly and to in changes over of will ability end growth impacting on quarters highlight generation without more detail and to quarter improving dividends to call through of to third in the positioned anticipation XXXX, react now variable aggressively servicing cost business a free cautious debt, will highest expectation flow and model the provide team structure supporting shareholders markets. our our disciplined in fiscal the leverage while share fourth reduce has and at and integrity us our level

Jeffrey Rodino

everyone. morning Thanks, Andy, good and

all primary As aggressively inventory tightly and of manage Andy rates to balance the level across channel. interest the continue cost OEMs end their production and by high inflation. noted, to levels in constrained markets remains demand

RV these the than worked to earnings. When factors first of in growth and structure, cost as decline Our the strategic with with tactical year-over-year diversification revenue revenue. housing intended team's in the to revenue approach managing contributed and half our more our the offsetting marine year combined in growth

actively the remain what well to our our and in that and to service, potential customer we will and recognize control, recovery enthusiasts to remains positioned supplier demand, scale and continue markets, housing a cannot is to outdoor As our influence innovation, it directly we focused consumer our best team solution capitalize on good, differentiated focus value our match. proposition. on given business better, We on

basis RV in second million, revenues a the last XX% $X,XXX period increasing Our RV were per on quarter XX% same about of period and $XXX X% the unit consolidated content compared from TTM representing up to same was XXXX year. revenue.

quarter at shipments the increased versus unit RV way. However, unit Motorized to lower-end quarter, pace. on for XX a towables versus in shipments X% XXXX. RV We per quarter content and on leading sequentially, shipments estimate XX the estimated weeks basis TTM decreased of retail XX% hand with the wholesale the in in an unit first second the row, increased a a towable down RV historical higher to rising total quarter weeks the in in increased XX quarter, approximately hand. on modest were priced X% XX resulting

or come current is quarter in down. weeks believe hand the below focus interest dealers rates destocking velocity on retail to While well third will improves floorplan on historical until we continue inventory levels,

XX% from quarter second million, sales. the prior XX% $XXX of were Our consolidated marine up year, representing revenues

of year customers content a pricing unit the product from to marine and first basis X% quarter primarily XX% mix. for given $X,XXX, XXXX, from was on period TTM approximately the back down wholesale reflecting estimated last and Our same

and and we in As and XX% ski higher heavily we've the XX%, indexed approximately were quarter which are categories, discussed, pontoon XX%, more estimate second wake towards respectively, down engineered we and and year-to-date. respectively, XX%

marine our a revenue As prior reminder, first quarter, the to in market. reported we powersports

have restated per We numbers unit content reflect prior and to adjustments. year's the current our and figures these

dropped approximately implying weeks units. We slide the estimate XX XX powerboat our of the XX,XXX below the shipments respectively, retail XX is at weeks. in you For historical market which weeks hand find to We quarter, and unit purposes, well reduction by can end XX,XXX XX deck. end inventory XXXX the were modeling to XX,XXX revenues wholesale to estimate our of and quarter, units in the earnings on

our need recovers. incredible remain RV in markets, we restock discipline While exhibited accelerate demand near-term by to end interest encouraged are marine by which headwinds, will believe our we the the when partners rates and

housing our which year-over-year was XX% sales. quarter, remains of $XXX offsetting businesses, up our and manufactured to increased rates and strong quarter. per million, housing represents declined to XX% new leading sell, increased low-velocity estimated the Demand As purchase in up MH while and content slightly total represents consolidated approximately revenue interest XX% X% for starts single-family in marine-related consumers' was a but housing, on the housing market. of housing XX% X%, basis the partially multifamily noted, our In and X% affordable housing of representing starts revenue down willingness unit up is sequentially. to decline XX% to with our stable TTM Single-family ability still starts housing the in continue to limited. High in XX%. supply to a quarter housing housing shipments impact $X,XXX total

were Our sales. XXXX $XXX representing revenues XX% second million the quarter consolidated of in our powersports quarter,

has inventory primarily the stable of emphasis remained the balanced side-by-side side the has segment while with on levels levels. with and centered is market. business the remained elevated powersports the recreation of volatile resilient Utility industry, been around cart Our market have our inventory sectors golf backlogs with The and motorcycle utility an of the segment

for quarter their and both year-to-date to products. continued has Sportech demand due in to noted, As results solid deliver continued the better-than-expected

that expect Sportech and will strategic growth for platform continue in We organic an powersports. be to future

is the On and businesses Andy while momentum Group with between partners. the deepening to, innovation continuing which collaboration Product referred us our gain our OEM Advanced front, to

are as for composite supply components quarter. offer over quarter begun us and have offers us with on which positive and and installations, and our side the content used exclusive of connectivity of capture allows a interior numerous the be in of our sustainable This RV new improves [ both exterior the RV our durability, us a weight reliability, low-profile previously and other options, chain distribution sleek to the RV efficiencies new need of As valued design RVs, antenna combination improving more customers. The a ] we by benefits as component while greatly provides favored the extremely on evidenced the in minimalistic the can bulky applications long-term. Staying revenue solution for we well production significant opportunity introduction savings, products Tileglass, RVers. by composite for business, solutions antenna proprietary areas to eliminates portfolio. and the into during underrepresented of Composites this our our tap where including versatile and are potential

are advanced marine recently Gear and Geremarie's systems. mirror side frame, pre-existing the Glass This a earlier, We introduced to Roeder, million. I'll for the replicate. that stanchions, production capabilities, as total call with of that customers, business, system highly for enables hinging, fully integrated small infrastructure, Andy of to the and over turn of solution Andy this is financial includes a the difficult windshield cutting-edge market. lighting, now more who'll performance. we others estimate discussed On integrated launched technology designs over group use automated market to but additional is production on provide comments our the recently $XXX addressable well

Andrew Roeder

everybody. and supporting enhancing my Jeff, first quarter at Thanks, immersing enjoyed focused been working the have on full relationships, my morning and and teams. good deepening myself and our in I've Patrick business,

to Moving results. financial our

impact by decline better-than-expected consolidated the net XX% acquisition. to related factors revenue coupled to $X.XX driven during Together, and with these increased more housing, the powersports marine in second XX% period. revenue XX% Sportech market in in our of Our RV XX% growth quarter the in of than sales offset a results billion,

our effectively Our gross SG&A expenses sales. to million quarter improved to related noted diluted with This of revenue control the income XX from successful increased a margin X.X%. while a year-over-year, RV XXXX. Operating was increased of of businesses quarter. Gross to share. to basis higher our percentage but points which higher consistent of which labor million, of or per increased The operating margin in million production X% again improvement as profile. Net our XX% $XX amortization manage of costs businesses, increased XX% margin grew period X% partially and lower XXXX, Sportech ability as quarter quarter. by XX quarter operating in or was basis sales our offset as business housing from the of expenses with XX.X% result fixed from points second the last marine to in margin Total and diversify $X a a or first million, higher representing earlier, cost be the $XXX $XXX to Amortization points $X XXXX, efforts the million mix. increased to million in evident XX expense XX% during and increased in and revenue basis acquisitions to as decreased million year. reflected to to $X.XX our and primarily percent second was XX% $XX operating the actively acquisition income profit stronger $XX tend the

Our XXXX from dilution price. EPS $X.XX per the includes a result for notes XXXX as our our approximately the convertible stock share quarter additional of accounting-related second in in increase of

As amount or the dilution to and cash company is to principal make noted reduce convertible are to place which conversion the of any any any upon required expected last quarter, excess we notes. the potential payments common converted in had the eliminate any notes company's stock of or offset of hedges in

versus share. million always Adjusted $XXX expanded second XXXX. XX XX.X% and last these of grew hedges be are basis year. quarter margin earnings to EBITDA for points the purposes, Adjusted anti-dilutive million XX% when therefore cannot $XXX For EBITDA per included reporting to reporting

effective compared prior overall the for second XX.X% was in rate to year. Our XX.X% tax quarter the

We be approximately year million by third rate tax and $XXX was our million operations provided the expect $XXX XX% XXXX approximately prior for to months effective the period. XX% the X of quarters. Cash compared first to in to fourth for

million, quarter reflecting plant, purchases of $XX enhancements. and This property, select and investment automation were in equipment facility continued

and capital and of and creating commitment automation innovation deployment value strategic customers reinforces for Our stakeholders. to our long-term

expenditures $XX million We continue will million. total our to XXXX estimate $XX capital to

in ratio time hand the at remains in debt $XXX million, plan acquisition. We expand allocation cash our our toward our a of of continues closed liquidity of quarter, X.Xx repaying team capital we down Our on presence million we a leverage Sportech After on capacity first balance revolving at net strategy ended million opportunistic with specific target the with markets. the X.Xx, total X.Xx facility and comprised with progress from million. complement on and solid end the of on leverage acquisitions that $XX of sheet unused quarter range. and June total our during $XX to our end to $XXX reducing remain about make businesses net credit ended of focus in our the and We the quarter existing our net

strategic the in we cash evaluate initiatives, will reinvesting we these As growth to returning business balance our and with shareholders.

With trailing debt to arise. We to flexibility remain we free they of and profitable liquidity XX free period, During cash to flow, the to on continue as during offense, for not maintaining shares opportunities the form strategic quarter, no $XX $XXX million $XXX million we during strength, major and XXXX, did maturities quarter. quarter. balance have we We generated of generated any month shareholders the repurchase ability seize dividends million the until the cash flow. the returned the in growth of sheet

of under opportunistic on had the end plan and However, share left our million remain second will at the we future repurchases authorized $XX quarter. current

within X.XXx to our our focusing to leverage As noted prioritizing range we reducing X.Xx. target strategic Andy while opportunities earlier, are on of

wholesale for our We year. the end outlook. previously retail market full one-for-one environment to a expected Moving

extremely third focus cautious minimum levels confidence or on environment and and marine expect of in and and end improves. rate through inventory maintaining to quarter However, until the we year the remain the RV dealers the consumer now dealers

both RV markets. result, estimates wholesale lower of and estimates range, intact, our a unit but the end our for retail our we As shifting are shipment keeping reducing to marine

unchanged. XXX,XXX unit the toward quarter approximately estimate is categories be approximately midpoint, range, retail will and rate RV a flat down suggesting in We At be unit will expect XX%, RVs these outlook imply a up to the or our of XXXX our mix we X% market, reduction of unit to end our shipments of Our of be content dealer mid-single for our XXX,XXX end outlook powersports product and be XXX,XXX approximately remains product XXX,XXX opportunity end XX%. range, shipments our digits. units. to housing shipments wholesale of our for Similar or unit our market, units. In unit end to XX% boats, expect XXXX powersports reduction to In retail first XXXX. XX% estimate a XX,XXX XX,XXX or XXX,XXX XX% we full recovery of our inventory industry be We in down significant we approximately now will restock industry be which overall year down MH to demand forecast calendar unit in lower lower organic our high is at represents a wholesale shipments shipment previous XX%. below the will XXXX on shipments XX%, RV year will our to full estimate approximately wholesale interest the marine, implying down towards up now This RV, units. estimate year estimates relief. In

of $XXX million housing side versus the points now total imply up versus current our XXXX. The versus be market, each year new the XXXX. a we residential per market to starts of end full flat XXXX housing operating revenue flat end XX an the we outlook. approximately unit assuming to market, on to On estimate our X% prior Therefore, end be reduction for market will content margin basis forecast, changes in basis adjusted expect for up

of million operating million, estimates. That our full or our flow completes estimate $XXX based implying $XXX on million be year cash will remarks. to cash to continue We more my $XXX CapEx flow free

ready questions. now are We for

Operator

first line of And will Moore [Operator be Instructions] the Securities. question CJS from today Daniel our with coming

Dan Moore

retail terms in appreciate RV heard dealer inventories levels, guess, from with surprise That's we've it's of I first, discipline summer retail a hand consistently not cadence better, the of be can weeks how would getting inventory incrementally perspective, on the a to the hearing worse, the anything us whether one. on how some I on your lower low of from great. And just kind at go perspective? developed what has what what -- on that? Just year-over-year, update from here. start anecdotally you're side. the Again, any the Maybe color signals on give

Andy L. Nemeth

is This Andy. Dan. Sure,

the at at, weeks season. going QX relates destocking of of at bit it next fourth and we're the to get back towards is of little show of in end we're we XX towards We be As a continued to there uplift QX. end where weeks on hand think as the here kind with XX to quarter the

we XX expect this we in at a again, weeks it So feel like should. of, see I dip to QX to now do kind right is XX but think

our Our right on back be XX to coming weeks. now, based expectation this estimates, to would putting, XX

So again, I go think lower. it can

inflection I in the sure and thoughtful, think make what optimistic more we need think get very keep about being discipline that are extremely the there is restock. inventories being as today. we see check. And OEs in are an they thoughtful marketplace to point, to do and when is, the I tremendous Dealers well excited these

view numbers weeks our normal Our based think seasonalized impact. and a low that XX analytics would is more on be we XX too to for

perspective, to bouncing relates perspective our a I of kind bottom as weeks-on-hand it from along kind on from we're So the again, hand. think of average weeks

from the thoughtful here that changed numbers, bit our And side. down ago. next everybody's in in this on estimates again, as saw overall, that point As really the the XX% a on we're at year inflection consistent we for weeks the throughout come that's we the But it think is a to us more in down little time. relates being May, QX going June watching bit QX, hand retail far, so to spooked little point. We a seen from trends and just haven't of kind nothing of again kind estimating, we've of year comps still retail

Dan Moore

ability little more seeing both powersports, Very and guide, the gains utility you bit maintain consumer perspective on it. of color content growth how side a and a give like on the little then helpful. lot market look in are outpace you're maybe is an know Got the longer-term. and I to versus questions from drive business? you bit you -- what's just few And market side? in terms of near-term end more then should And what your think, a kind look a algo different in things of that organic what both for near-term long-term trending but there, like? there do on What

Andy L. Nemeth

Sure.

supercharged. As it and Sportech to really is relates Powersports

Our today, this presence in rates go seeing attachment space we're up.

about utility from the product we to what perspective, it really so side, that's relates on see as And an especially the there, solution, organic focused. we're especially Sportech where which optimistic is

a And utility so much lot while stable. the side has the seeing rec volatility, more been is side of

fits Our only addition content we and out model stable, the to and fabulous brands, attachment as our year, a as with not up, right but expect with gains again been for well current extremely going advance backlogs the perspective. And the years looking has an is our line in team are which product the longer-term X culturally as of out short-term, Sportech, Sportech portfolio are they both of our continued in with group, rates from innovative, and X operational are for model partner customers. advanced really to

And well so as it a see that grow powersports continue to we with upside to strategic to being that in business, potential market. platform as continue

well space. the and as customers So innovation as about good the well utility really about their automation, good to really Sportech feel But space. in that with be We working in. participates that really side feel tremendous as powersports forward-looking

optimistic short-term long-term. we're and So

Dan Moore

XX%. for in part are And XX%. business? up outlook experiencing their and jump the areas, nice plans similar One now remainder business think All queue. of right. you pleasant customers Very in close production year? in I'll been you your shipments X% you to that more, a about surprise. MH, Are I but smaller overall, you of a to it's from helpful. hearing given piece other what the growth up set Year-to-date obviously back expanded your of

back conservative, or decline in there? if any being growth half just So curious thoughts softer that implies the a

Andy L. Nemeth

We've to market space, it been believe in the in absolutely there think and in think, it on cautious relates the of long-term housing the pleasantly MH production being inventories channel. inventories relates as the I value balance surprised We We the especially MH to certainly the we're in as towards the are just side. year. levels. back with half single-family

for And us. so been positive has very MH

done we're team Our gaining there. out products we've a got has content, great new job,

So XX%, point cautious, I see do to I that again and as also some we'll MH that looking interest as just some to feel well good X% inflection similar the outdoor the I we rate out. enthusiast about being MH think on think uptick if market, side. get

our is nothing say what So, negative group. results from positive would to housing I continue expect and

Operator

Our from next the question line is of Mike Securities. Swartz with Truist

Michael Swartz

anticipated. us just Is Maybe acquisition than is for follow-up of exactly maybe what to would demand, us powersports more on and just utility it's is that the any understanding that. Maybe that the of around, to color be side had Andy, tied going the that a you think, line? margins -- you're that going business industry that I the top side better framework give you mean, a integration, is and little But give great. said sense,

Andy L. Nemeth

relates our opportunities Sportech. in enthusiast the vice versa. spaces introducing all as -- certainly, work from as the synergy at we I capabilities had alignment. their fronts of positive, it's portfolio about look and relates cultural Sportech, to as been team done inquire Sportech it our a to lot We've fit, outdoor customers and We've to team, brand it Certainly, of like said, the

really traction, we're from to model working for solutions our primarily is the on and would full what closures, rates we're out We've I relates positive in where as us, relates in excited it's general. Again, increasing about that. attachment Sportech other space say well, again it to So, as plays to plays similar and cabin today, the in our sector, overall it perspective, a the which so the seen very, very energy just utility resilience businesses.

I again, In to of of leveraging really expand this kind off opportunities like said, the strategic exist our in the Sportech presence. launch talent that abilities really continue team's and powersports to addition to to, that space, platform

just including positive it's So performance expectations. very, performance been from operational very of and all our the business from financial overall, the fronts,

Michael Swartz

I annualized it? had you about the quarter powersports, missed revenue think right think anticipated may on still that the previously to first million $XXX have this, that segment. powersports I mentioned, in you And call but in your Is about had way mentioned you

Andrew Roeder

Andy Mike. to is Yes, This we're number. that Roeder. Yes, tracking

So that that's yes, going tracking still and we're with business what are things towards. well

Michael Swartz

Awesome. Okay.

over broader have a more little than industry. content a per the more margin any understanding the But about Is the is have bit side. the bit relative side, to way I areas much just are unit exposure pertains some Just little how to to think question you softer maybe a that there way greater -- your the segments some I'm content any a manufacturer content broader per to sense this boat the unit content than average just and that. XX% to Meaning of is manufacturer. those relative skew that ski towards the pool? into you wake think of is to trying more about get in

Andy L. Nemeth

areas about, that as group, especially question, excited showing where we the again of without this is continued towards well, depth of solutions and indexed we're these talk we relates one to breadth the it those which we're is ski in portfolio as things, higher perspective about Andy. itself the and runway opportunities from And and to wake that pontoon. there Mike, is our markets And Yes, and is believe is and really to product these across in advanced bringing exist customers. spectrum. today a the our solutions which

go, heavily we were we kind and in as can indexed. relates in that spaces absolutely to believe And we certainly so, where were grow as indexed of the spaces heavily not that content continue it those to can

that our really not an perspective, of markets in all exceed where from there. runway X% on we're annual of annually. expect We including marine, the So those achieve X% basis kind that, target an indexed. to including also organic if is and And going heavily forward to we fully markets,

Michael Swartz

one reported Okay. me, us give was housekeeping, just for in can organic, M&A, of one in that And then the the XX% industry, between breakout you the just growth final quarter, terms please?

Andrew Roeder

down This X%, breaks organic Mike. up growth have Of up and X%. organic industry, X%. X%, Sure, content share we Yes. is Andy up then acquisition again. growth pricing down X%. And Roeder, that down with growth Overall

Operator

line next The Kennison of is from Craig Baird. question with the

Craig Kennison

concerned a any given this And you that better that a slowdown about called I and all might that think destock consumer and utility you've position, in a what But category we've to powersports you're just sign in you're signals reluctant look for exposed. spend? where curious, more correctly at whether while, be been seeing you're for

Andy L. Nemeth

time. not our We're attachment seeing that in seeing place. take We're backlogs rates solid at again We're this point grow. seeing,

to our continues like feel we as relates there expectations. stable to up the So it opportunity be to

feel to -- backlogs And do so understand balance. Again, are our be like on constantly customers look penetration certainly what to the are But at. like? we What's and signals they're X. out and and products feel has opportunities those basis strong, new for there we is, We're innovations a exciting our for our to been going certainly is we inventories with where us. go-forward what talking the in look like

we're upfit being seeing units are side. we that the and business. in signs utility, do not of at we're attachment little that continue Even point weakening which seeing on see if this rates So not pullback runs any side to The as there, bit it time. Again, OEs. relates the of aftermarket and to space out the on we That tremendous side there go serve OE there today. is in both up potential for said, the through aftermarket a existing

that ability So, rates increase attachment we and in of universe its -- primarily utility sector, space. to kind Sportech continue its of in look to its primary at

Craig Kennison

helpful, And curious a you've relates just us seem excited as related help also internal that. new Andy. follow-up your to if platform, platform a you can can powersports, see and those you as very that about Fosgate. in some the I'm maybe acquired Rockford to That's Maybe you Sportech, to can hard it the understand from acquisition. synergies of how light synergies shed some what It's for one. us as on platform do developments develop outside on a

Andy L. Nemeth

and Sure. From our of the existing understanding relates of Sportech lot of processes it business, processes today our the equipment as spectrum practices. operational that that side best a the capabilities manufacturing have across we to are does

got windows, already full has cabin that kind innovative. And and a Sportech the when to brings we We've is framing, products even incorporate wire solution linkage again tubing, to a for solution the got the Sportech in think really customers that but produces that to the then extremely one-stop Sportech whether further it space lot be as of dash technology it's we've panel we've for a doors, so audio, relates shop a about capabilities, today there full bringing to harnesses. amongst the able electronics we've we the our can the bring be got that customer, got closure, solutions and us. And of into

that processes to out do it just the does, with want front not we Sportech but their it's of go. similar where to their Again, their So be forward, relates and ability lot already alignment manufacturing. engineering, in innovation we in look a to as

of perfectly the amount of a understate Just a team. want who impact with don't motivated the and And extremely of companies. just are fit It's portfolio cultural again to partnership. and tremendous synergies of our leaders they fit I and again, the and And fabulous with connected. group energized

Jeffrey Rodino

companies our last to And Craig, really from all Jeff, our and that over to divisions we excited and capabilities thing this from the all into kind making capacities are week all collaborating of is, the one would managers sure is from what know bring add our of operations. to very country of were other Elkhart operational all last of week I start

start of all across to relationships grow companies. So kind really can of our those we

where those something can that's scenes. is some really behind to kind of -- to get that of the there if with, advantageous synergies out the can other take operations guys of really collaboration and it's place So start some really help together

Craig Kennison

great. stocking end in on as around demand your wondering, I'm markets? levels early. for you is year, what of and set it's just And assumptions next XXXX, plan your I That's know quickly

Andy L. Nemeth

is Craig, Sure. this Andy.

early level, going it's be to to restock. in more to initially, in to at and but if time certainly we're think levels again I come for phase. are XXXX look the a needs we scenarios, for as dealer of space, up. we modeling at everybody be participate opportunistic And point that able done this to again, be there expect the in think And kind we at this down, We've various be inventory retail in level, certainly where restock. under at at, the everyone rates

going up think in We each to markets early. be next of year. our it's So, it's

want at certainly, bigger points if to an guess estimate. percentages the numbers you say than factor low-double restock to can a You mid-single-digit But as this that. point

point. we're today that the where see given to in get on inflection we that restock the we our that where at know So hand that's markets. the pinpoint weeks plays, ready we can but that's optimistic really I don't specifically again yet, get especially excited as

Operator

the Scott from next of line with MKM. question ROTH Stember is Our

Scott Stember

more like in But notably a the kind RV You are particularly being are that the sounds in from guys seeing perspective guess, on the were roll-out OEMs, side, marine and it all guess, July? third has quarter, been I from of year. part order half OEMs, in expecting what year obviously in lot of in, a is about back cautious And the talking bit. I the you model out of -- the what you pushed little an the 'XX RVs rec

Jeffrey Rodino

Yes.

that. now. pretty days will intermittent from shutdowns, as Labor as through know years jumping page far ago. Day so far. so we've mentioned as consistent here, year couple seen back, are -- seen of in minutes that levels gets production pushed seen So, the a of maybe at week off this really levels there the gone looking right pretty part frame Open a kind there it couple being out the model But unexpected, the nothing Certainly, we've time the a them we've nothing of but off you all the production around House, of we see that I don't consistent we've off

dealers as bring a think the still down. pretty that weeks are going we So times, has as consistent. But we Andy inventory on that believe couple to hand mentioned

be there. that rates But seem production slower and they consistent. expect We on overall will basis, here as pretty weeks there some per-day a as far the

Scott Stember

impressive. And XX a get it. months, but you that a as I But that would X% we to as sense, to next guess, about, number into early, content just know far you content it's on expect trying the very growth talked going again organic next where perspective? be, year, Got over the

Andy L. Nemeth

Scott, this Andy. Yes, is

X% and targeting customers. should I months we've doing picked have of teams of next working both about, than markets. extremely I our of prototype be right our business years in been we're we're in The really that last we're our number seen a to is is in the in we've today X the active up with think think amount now -- prototyping but forthcoming that the more excited X%, lot XX XX over to what general, again, of

But expect solutions exceed And innovation picked see to that so, lot to certainly the next to penetration the We've that XX XX organic. set and given so organic kind we've a our at we content longer-term. of that over X% happening. X% our the customers we're innovation I would bar with up we doing the months, and just had, over marketing the of

Operator

Our questions of line Zatzkin Capital Markets. Noah are next with KeyBanc from the

Noah Zatzkin

Just kind a of markets of question, expectations the volume year. couple off ago, a end of across just next piggybacking I around think questions for

this incremental about next tweaked of margin down majority to assume, of vast were mid-single of was of relative to maybe year, million you this end digits the how margin digits guys softness the kind I grow year. but like like market guide may the low kind to year? $XXX you opportunity the year and double this, do If think mentioned you have this

volumes margins through So increase. of just leverageability next year the as trying to think

Andy L. Nemeth

to today, an we've costs of sized ability We've the amount our support Sure. volume tell the power you run up. talking that exact flex significant of levels got markets our we capacity. margin to to This the earnings what rates. need factor, the about is the kind And of number incremental We in company organization a giving to each the to current add I you're businesses is, fixed about. talk Andy. not in it Without would our back as do of incremental relates

And And gets so kind look potential upside pulled margins really -- margin down each again us operating when at bit, with a up we of rest of the wholesale what base. being strong. we our pulled run very that's to our the high-margin, think cost markets. And right, marine back high numbers we about a rates that's fixed perspective, the excited year. product a you in high-engineered little a And brought from with we -- group, out today consistent through of the match

the So power. volume us earnings at in potential is the perspective to the meaningful. Board, where about get as for our leverageability, that's we across we look And mid-single from double-digit upticks excited

giving about on optimistic are up exact kind without of ability significant our very incremental without costs. the So to fixed adding we flex you numbers incremental,

Noah Zatzkin

there Any [ what out are in terms there? more. to set from one kind perspective out M&A seeing valuations on just call Maybe ] helpful. opportunity Really of that update you're an of incentivizing

Andy L. Nemeth

our or down -- flow pipeline is has third M&A fairly acquisition parties is from I'll outside Sure. deal continuously organically. slowed you, now. we're cultivating bit, kind And coming right a tell little of inactive

we actively are own side, seeing organically from banking come We deals cultivating acquisition the but our investment are some pipeline. always across

multiples years have a deal where ago. were stabilized, so, of couple And from certainly they

kind that everybody of at perspectives, deal we're putting versus the rates rates at today. of the kind look we As run is running normalized valuations around run

be deals. it. We're we we pipeline. creative valuation cultivating our comes very creating it acquisition when to very so, can about And to can opportunities we flexible, are And continuously be optimistic related

and acquisitions at we'll to looking do actively are We so. continue

is liquidity as is financing we very where to we've strong, extremely noted, Our is be our strong. it platform leverages want and

looking we actively So and are acquisitions cultivating continuously pipeline. in at our acquisitions

Operator

BMO question next of the Tristan Our line from with Thomas-Martin Markets. is Capital

Tristan Thomas-Martin

How after needs and a to ahead of mentioned it You terms Is timing? probably 'XX. restock restock just I flex? are thinking of retail selling in kind be that? to there the Is you confidence was dealers of couple what of a gets times, season? think about do in you it wondering, the

Jeffrey Rodino

that, think, maybe I selling December. season, so late November the at into here, thinking Yes, of next we're into getting end XXXX

they're to have they the through to to get -- but fourth, the the if show and starting believe they quarter going that third think in restock season. I levels that to go season, to need coming selling the the they'll into we here

and in Just a there, push through to season quick saw also conversations and some business transportation late. bit show our pretty out get our maybe product we cases side, kind there a going of the into little the and was that

this going to -- that end we at to, 'XX. think we And year, restock slight Maybe go of it's will inevitable. the that that 'XX a a into really inventory So that levels that's happen. see earlier they're the is when restock bit

Tristan Thomas-Martin

very Camping in Okay. that It cheaper cheaper is lot units to dealership that. then chains This been is continues of the kind and RV If way quantify side. do kind following price renewed like question. could seems what ] of 'XX towards targeting as to just there has on that push of this content? any aggressive, a well, your [ a kind of And points. there are is

Andy L. Nemeth

with And working Yes, relates on fluid have this both down. again point, active our with are stable on customers we prices fairly very the in Andy. we as And customers At our our are partnering been. across very up commodities our and is and and it the this on to right are pricing now products.

low end The erosion. is them. side And the so definitely we're content units relates not in of that a towards mix lot as have of smaller content the RV expecting less business do the to skewed on it

restock, potential also of where see larger upside dealers affordability the moving and the smaller we not we so towards it only units they're potential unit consumer but that today. upside see to base from relates And when off

remain isn't that in our relates content of been our that's from movements expecting in with But to do expect continue So, lot We're very partnering there. going I to we with think very, we've prices. doing customers erosion see and as to it customers pricing a commodity out our we're that. to changed partnership the anything that our related to as we not active

Operator

are questions Moore line next Our from CJS Daniel Securities. with of the

Steve O’Hara

dropped maybe he yes, -- he think I off.

Operator

Nemeth to for like Andy I'd back call now turn the you. closing to Thank remarks.

Andy L. Nemeth

results, Together and and develop generating pursuit complement employees cash customer-focused the energized Thank our today balance which support. Their to and maintaining continued commitment our and our good, returns innovation, proposition, of you for existing helps culture, future best our us the our value growth, grow success drive Patrick by to maximizing and call you. want contributions free our end portfolio. Patrick, resilient each continue shareholders. innovative, Better for about allows to organic our and of driving support to flow, again and every remain their thanking on focused dedicated that once through Thank leadership I solutions. expertise customers, to their better, our day. to the We're sheet, will We strong your acquisitions on accretive deliver

Operator

teleconference. and Thank concludes may Thank and you for you your today's gentlemen, you. this disconnect. participation Ladies now

Patrick Industries (PATK) 1 Aug 242024 Q2 Earnings call transcript