Patrick Industries Inc., a manufacturer and distributor of building and component products for the recreational vehicle, marine, manufactured housing and industrial markets, reported that sales for its second quarter increased $8.3 million, or 1%, to $613.2 million from $604.9 million in the same quarter of 2018.
According to a release, the increase in the second quarter was primarily attributable to acquisitions and market share gains, which was partially offset by quarter-over-quarter shipment declines in its primary RV and MH markets. The company’s revenues from the RV industry, which represented 56% of second quarter 2019 sales, decreased 13% from the second quarter of 2018.
For the second quarter, Patrick reported operating income of $45.2 million, a decrease of 15%, or $7.9 million, from $53.1 million reported in the second quarter of 2018. Net income in the second quarter of 2019 was $27.4 million compared to $34.9 million in the year-ago period, while net income per diluted share was $1.18 compared to $1.42.
Patrick Chairman and Chief Executive Officer Todd Cleveland said, “Our second quarter performance reflects our team’s ongoing efforts and discipline while we navigate continued aggressive dealer inventory rebalancing in the RV market sector and weather-related issues and conditions which hampered certain sectors of the marine and manufactured housing markets. Our consolidated net sales and profitability were negatively impacted in the second quarter of 2019 by the double digit decline in industry shipments, in the aggregate, in our four primary markets. Our profit margins were unfavorably impacted by certain 2018 distribution-related acquisitions that carry lower overall profit margins relative to our overall margin profile.
“In addition, in the short-term, we continued to carry a higher operating overhead cost structure relative to revenues in certain distribution operating units, and manufacturing overhead in certain manufacturing units, in order to be in position to respond quickly to anticipated increased demand levels as the RV dealer inventories reach equilibrium and negative weather-related conditions improve.”
President Andy Nemeth stated, “The diversification of our market portfolio positively impacted our second-quarter results and helped to partially offset RV market volatility. Fundamentally strong demographic and consumer trends continue to support and reinforce a solid long-term retail outlook and sentiment for all of our primary markets. We remain optimistic about RV industry shipments in anticipation of the upcoming RV dealer show season, based on the combination of sustained retail demand and lower inventory levels resulting from continued dealer inventory recalibration.
“Additionally, certain headwinds that negatively impacted our 2018 markets, including rising interest rates and commodity costs, have dissipated in 2019 and have the potential to be tailwinds in the long-term, positioning both our leisure lifestyle and housing and industrial markets for a strong return in the latter half of 2019 and into 2020.”
The company’s RV content per wholesale unit, on a trailing 12-month basis, for the second quarter increased approximately 19% to an estimated $3,137 from $2,639 for the second quarter of 2018.
Six-month sales increased $64.7 million, or 6%, to $1.22 billion from $1.16 billion in the same period of 2018. The increase in the first six months of 2019 was primarily attributable to acquisitions and organic growth, which was partially offset by shipment declines in our primary markets.
Six-month operating income was $81.1 million, a decrease of 15%, or $13.7 million, from $94.8 million reported in the first six months of 2018. Net income in the first six months of 2019 was $48.3 million compared to $64.9 million in the first six months of 2018, and net income per diluted share was $2.07 and $2.62 for the first six months of 2019 and 2018, respectively.
For the six months, Patrick’s revenues from the RV industry, which represented 56% of sales, decreased 12% from the first six months of 2018, compared to a 20% decrease in RV industry wholesale unit shipments, as estimated by the company. Revenues from the marine industry, which represented 15% of six months 2019 sales, increased 64% over the first six months of 2018, while estimated marine powerboat retail unit shipments decreased by approximately 7%.
“Our market mix, which is now 56% RV and 44% non-RV, provides us with an attractive diversified platform to continue to execute on our operating model and invest in organic and strategic growth initiatives,” Nemeth stated. “In addition, we plan to focus on leveraging our existing brands and expertise, customer relationships, innovation initiatives, and manufacturing capabilities to drive market share gains, and to realize operating efficiencies and execute on synergies across the organization. Our strong cash flows allow us to stay nimble and disciplined to our opportunistic capital allocation strategy and poised to continue to return value to our shareholders.”
“For the remainder of 2019, we will continue to focus on flexing our business model with our industry business environments, positioning ourselves to capitalize on the anticipated market improvement, and maximizing opportunities to support our long-term strategic growth initiatives,” Cleveland stated. “The talent, commitment and dedication of our 8,000+ team members across our organization and our business model and operating platform, provide a solid foundation for us to effectively execute on our organizational strategic agenda.”
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