Patrick Industries (PATK) Q4 2023 earnings summary

Executive summary

• Q4 net sales fell 18% YoY to $781M amid lower OEM shipments and commodity-related pricing; operating margin rose 20 bps to 7.3% on cost control and diversification.

• FY 2023 sales declined 29% to $3.5B, while free cash flow reached $350M and $260M of long-term debt was repaid.

Financial highlights

• Q4 gross margin rose 180 bps to 22.9%; operating income fell 15% to $57M, net income fell 23% to $31M, and diluted EPS fell 16% to $1.41.

• Q4 adjusted EBITDA was $100M, down 8%, while adjusted EBITDA margin increased 140 bps to 12.8%; FY adjusted EBITDA was $425M, down 34%, with margin at 12.2%.

• FY operating income fell 48% to $260M, net income fell 56% to $143M, and diluted EPS fell 52% to $6.50; operating margin was 7.5%, down from 10.2%.

• Q4 and FY diluted EPS included ~$0.08 and ~$0.21, respectively, of one-time expenses for tornado damage, severance and facility consolidations, net of a favorable fair-value adjustment.

Outlook and guidance

• FY 2024 operating margin expected to increase 30–50 bps from FY 2023’s 7.5%; operating cash flow forecast at $390M–$400M and free cash flow at $310M+.

• FY 2024 RV wholesale shipments forecast at 330K–350K units and RV retail shipments down 5–10%; marine wholesale powerboat shipments down 5–10%, with marine retail flat to down mid-single digits.

• Manufactured housing wholesale shipments and U.S. housing starts forecast flat; expected end-market improvement begins with RV, while Sportech expands utility and premium off-road exposure.