Patrick Industries, Inc. (PATK)

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Patrick Industries, Inc. (PATK)

Q4 2013 Earnings Conference Call

February 20, 2014 10:00 am ET


Todd M. Cleveland - President and Chief Executive Officer

Andy L. Nemeth - Executive Vice President, Finance, Chief Financial Officer, and Secretary, Treasurer

Julie Ann Kotowski - Director of Investor Relations


Daniel Moore - CJS Securities

Scott Stember - Sidoti & Company

Mark Cooper - Pacific Ridge Capital

Kevin Dewey - Sapphire Capital



Good morning, ladies and gentlemen, and welcome to the Patrick Industries, Inc. Fourth Quarter 2013 Earnings Conference Call. My name is Lorraine and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will conduct a question-and-answer session. Please note that this conference call is being recorded.

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

Julie Ann Kotowski

Good morning, everyone, and welcome to Patrick Industries 2013 fourth quarter conference call. I am Julie Ann Kotowski, Patrick's Director of Investor Relations, and I'm joined on the call today by Todd Cleveland, President and CEO, and Andy Nemeth, CFO.

As you know, we published our earnings release earlier this morning. On the call today, we are going to discuss our fourth quarter and full year 2013 results and provide an update on our business outlook and the markets that we serve. However, before we do so, it is my responsibility to inform you that certain statements made in today's conference call regarding Patrick Industries and its operations may be considered forward-looking statements under the securities laws.

As a result, I must caution you that there are a number of factors many of which are beyond the Company's control which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors are identified in our press releases, our Form 10-K for the year ended 2012, and in our other filings with the Securities and Exchange Commission.

Also please note that certain financial measures we may use on this call, such as adjusted net income and the related diluted earnings per share amounts, are non-GAAP measures. We undertake no obligation to update these statements after this call. Copies of documents filed with the SEC may be obtained from the SEC or by visiting the Investor Relations section of our website.

I would now like to turn the call over to Todd Cleveland.

Todd M. Cleveland

Thank you, Julie Ann, and thank you all for joining us on the call today. This morning I would like to briefly discuss the Company's fourth quarter and full year results for the period ending December 31, 2013. Andy will then provide specific details of our financial performance and I will conclude by providing an update on our business outlook and the major markets we serve.

The Company continued to perform well during the quarter with increased revenue, improved profitability and cash flows and market share gains. On the top line, we achieved net sales of $147 million in the fourth quarter, the highest fourth quarter sales level in the Company's history, and year-to-date we reported record net sales of $595 million, an increase of $158 million or 36% from 2012.

During the fourth quarter, we are pleased to report the pre-tax income more than doubled from the $3 million reported in 2012 to $8.1 million. For the full year 2013, pre-tax income increased over 82% or approximately $18 million to $39 million compared to $21 million in 2012.

Our reported net income per diluted share in the fourth quarter of 2013 was $0.47 which included the impact of a 38% effective tax rate compared to $0.30 in 2012 when we benefited from the effective tax rate of zero due to the reversal of our tax valuation allowance. For the full year 2013, reported net income per diluted share was $2.23 compared to $2.64 the prior year which included a non-cash income tax credit of $0.64 per diluted share.

After adjusting for these tax items and certain special items that Andy will expand on shortly, adjusted net income per diluted share was $0.47 in the fourth quarter of 2013 or an improvement of $0.24 per share from the adjusted $0.23 in the fourth quarter of 2012. For the 12 month period, adjusted net income per diluted share would have been $2.19 in 2013 versus $1.38 in 2012.

Now I'll turn the call over to Andy who will provide additional comments on our financial results. Andy?

Andy L. Nemeth

Thanks Todd. I would also like to welcome everyone to this conference call and review our financial results for the fourth quarter and 12 months of fiscal 2013. Our net sales for the fourth quarter of 2013 increased 38% over the prior year to $147 million, reflecting a combination of industry, market share and acquisition growth. Our RV revenue base was up approximately 43% in the fourth quarter of 2013 over the fourth quarter of 2012, and improving conditions and market share gains in the industrial market pushed sales levels up 57% from the 2012 quarter, while wholesale unit shipments in the MH industry improved 15%.

Additionally, the acquisitions completed in 2012 and in the third quarter of 2013 were primarily RV market-based and contributed to an increase in our RV market sales concentration in both the fourth quarter and the 12 months of 2013 compared to the prior year periods.

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