Patrick Industries today reported financial results for the fourth quarter and year ended Dec. 31, 2023.
Fourth quarter net sales decreased 18%, to $781 million from $952 million in the fourth quarter of 2022. The decline in revenue was primarily due to the impact on Patrick’s business from lower OEM wholesale unit shipments across its end markets during the period, and lower pricing passed on to its customers to reflect changes in certain commodity costs.
Operating income of $57 million decreased $11 million, or 15%, from $68 million in the fourth quarter of 2022. The decline was the result of lower sales, partially offset by cost reduction efforts. Operating margin of 7.3% increased 20 basis points compared to 7.1% in the same period a year ago due to Patrick’s team’s execution of cost savings initiatives, successful labor management, automation, continuous improvement and investments to strategically diversify our business through margin accretive acquisitions. These were partially offset by the higher fixed cost profile of its marine businesses, Patrick said.
Net income was $31 million, a decrease of 23%, compared to $40 million in the same period of 2022. Diluted earnings per share was $1.41, a decrease of 16% compared to $1.68. Fourth quarter 2023 diluted earnings per share included approximately $0.08 of one-time, non-recurring expenses related to tornado damage to two of Patrick’s facilities in Nashville, Tennessee, in December, severance and facility consolidations, net of a favorable fair-value measurement adjustment. Adjusted EBITDA was $100 million in the quarter, a decline of 8%, while adjusted EBITDA margin increased 140 basis points to 12.8% versus the prior year period.
“I am extremely proud of our team’s achievements throughout 2023 as they relentlessly focused on driving and delivering strong results in the face of challenging market conditions, with an unwavering commitment to our goal to be the supplier of choice to OEMs in the Outdoor Enthusiast and Housing markets,” said CEO Andy Nemeth. “Our team performed impressively, despite RV wholesale unit shipments hitting 10-year lows in 2023 and emerging marine headwinds that resulted in an almost 30% decline in marine wholesale shipment run rates in the second half of 2023 compared with the first half of the year. We executed on delivering strong free cash flows through disciplined cost control and prudent working capital management, while continuing to strengthen our financial foundation by repaying $260 million of debt in 2023 and reducing our inventory by $158 million. Our strong liquidity has enabled us to remain nimble and act decisively to take advantage of strategic opportunities, including investments like our recent acquisition of Sportech in January 2024. Our strategic diversification initiatives have enhanced our profitability despite cyclical pressures, and we expect to see improved performance when demand recovers.”
“We have continued to invest in our platform to ensure we remain focused on our goal of delivering the highest quality and service while actively listening to the voice of the customer. The recent creation of our Advanced Products Evolution Group, our continued investments in automation, AI, robotic learning, IT and software solutions, represent our commitment to continuously improve our customer focused model, as well as our financial and structural processes, further enabling us to drive long-term benefits that support future growth,” said Jeff Rodino, president.
Full Year 2023 Results
Net sales of $3.5 billion decreased 29% from a record $4.9 billion in 2022, reflecting the impact of a 37% decline in RV wholesale unit shipments during the year, a 7% decline in estimated marine wholesale unit shipments, a 21% decline in MH wholesale unit shipments, and a 9% decline in new housing starts as inflation and interest rates weighed on demand.
Operating income of $260 million decreased 48%, compared to $496 million in 2022. Operating margin of 7.5% declined 270 basis points from 10.2% in the prior year. Net income of $143 million decreased 56% compared to $328 million in 2022. Diluted earnings per share of $6.50 decreased 52% compared to $13.49 in the prior year. Diluted earnings per share in 2023 included approximately $0.21 of one-time, non-recurring expenses related to tornado damage to Patrick’s facilities in Nashville in December, severance and facility consolidations, net of a favorable fair-value measurement adjustment. Adjusted EBITDA for full year 2023 was $425 million, decreasing 34% from 2022.
“In the face of a challenging environment, our team members demonstrated our BETTER Together values, prioritizing improving our customer service, meeting our customers’ needs and managing in alignment with their dynamic production schedules while also focusing on our financial strength through initiatives including debt reduction, prudent working capital and cost management and realized operational efficiencies,” said Nemeth. “We are confident in the long-term growth potential of our business and remain optimistic that we will begin to see improvement in our end markets this year, starting with the RV market. Our recent acquisition of Sportech, with a focus on the attractive utility and premium off-road vehicle segment of the powersports market, provides us with another solid platform for future organic and strategic growth. Sportech enables us to further accelerate our momentum within the attractive Outdoor Enthusiast space, and we continue to see the potential to expand our total addressable market, furthering our strategic diversification. Looking ahead to 2024 with our strong capital structure and liquidity position, nimble business model, and focus on delivering the highest level of customer service, we remain ready to flex our business both for challenges and opportunities and drive profitable long-term growth.”