Supplier Patrick Industries Inc. continues to cut costs to combat the effects of depressed market conditions as the company reported a net loss for its third quarter on lower sales.
“As we move through the final quarter of this year, we continue to focus our efforts on cost reduction, cash management, debt reduction and margin improvement as we strive to overcome weak sales levels and financial pressures that have negatively impacted the industries and markets that Patrick serves,” said Todd Cleveland, president and COO for the Elkhart, Ind.-based firm which supplies the recreational vehicle, manufactured housing and industrial sectors.
The net loss for the quarter, ended Sept. 28, was $2.3 million compared with net income of $200,000 in the year-ago period. Patrick noted that results reflected restructuring costs related to the integration of Adorn LLC’s operations, acquired by Patrick last year. Third-quarter sales were $88.4 million compared to $136.6 million.
“During the third quarter, Patrick completed the final phase of its restructuring efforts to integrate Adorn with its existing businesses,” said CEO Paul Hassler. “Since the acquisition in May 2007, we have incurred approximately $3.3 million in restructuring charges on a pretax basis that included the closure and consolidation of certain operations. In addition, we have reduced our salaried and hourly headcount by more than 700 people since the acquisition of Adorn in an ongoing effort to manage administrative overhead costs.”
For the nine months, Patrick reported a net loss of $2.3 million compared to a net loss of $1.8 million the year prior. Results include pretax gains on the sale of property and equipment, including the divestiture of the company’s idle California facility, of approximately $4.5 million. Sales during the period totaled $309.2 million versus $327.8 million.
Patrick is also pursuing a restructuring of its credit facility. The company said that as the result of the “deterioration in all three of the major markets the company serves,” Patrick was in violation of its leverage and fixed charge covenants under the terms of its credit facility.
“We repaid an additional $15.3 million in term debt during the third quarter and are actively engaged in discussions with the company’s senior lenders to amend certain terms of our credit agreement to allow for greater operating flexibility under current and projected operating and economic conditions,” Cleveland said. “We anticipate that we will have a new or amended credit facility in place by mid-December.”