For Immediate Release
Patrick Industries Reports First Quarter Results
ELKHART, Ind., April 30, 2007 Patrick Industries, Inc. (NASDAQ: PATK) today announced its operating results for the first quarter ended March 31, 2007.
Patrick, a leading manufacturer and distributor of building and component products for the Recreational Vehicle (RV), Manufactured Housing (MH) and Industrial markets, reported a net loss of $0.6 million, or $0.13 per share, on net sales of $78.1 million for the first quarter of 2007, compared with net earnings of $0.7 million, or $0.15 per share, on net sales of $89.3 million for the same period in 2006.
The downturn in our two largest markets negatively impacted our sales in the first quarter, and added health care, severance and transaction related expenses hindered our efforts to control costs, said Paul E. Hassler, President and CEO of Patrick Industries. Discounting the effect of the FEMA-led hurricane relief effort last year, our sales were down 11 percent in the quarter, though our MH sales did outperform the MH industry.
Industry sales for manufactured homes were down 39 percent year-to-date and industry sales of RVs were down 16 percent as of February 2007, the most recent data available. The combined MH and RV market sectors represent approximately 64 percent of the Companys sales in the 2007 first quarter compared to 76 percent for the first quarter of 2006.
Industrial and other sales, which include sales to the kitchen cabinet, office furniture, store fixtures and other industries, represent approximately 36 percent of the Companys sales for 2007, compared with 24 percent for the same quarter of 2006.
During the quarter, our recent product introductions added $1 million in sales, and we are optimistic this will accelerate as we gain market share for these products, said Hassler. Additionally, we added $2.8 million in profitable sales from our recently acquired American Hardwoods division, which only included February and March of the quarter, and this unit was immediately accretive to earnings in 2007. As we follow our strategic plan, we expect the contributions from our new products and American Hardwoods, along with the expected contribution from our pending acquisition of Adorn LLC, will put us in a strong position for long-term growth.
Patrick reported gross margin of 11.3 percent for the first quarter of 2007, a 100 basis point decrease compared with gross margin of 12.3 percent in the same quarter of 2006. Patrick reported an operating loss of $0.5 million for the first quarter of 2007 compared to operating income of $1.5 million in the same quarter of 2006, reflecting higher costs and difficult market conditions.
In January 2007, Patrick acquired Phoenix-based American Hardwoods, Inc., a supplier of hardwood products to the industrial markets. American Hardwoods reported approximately $18 million in revenue in 2006.
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Patrick Industries, Inc. / Page 2 of 3
Following the end of the first quarter, Patrick announced an agreement in April to acquire Elkhart, Ind.-based Adorn LLC, a manufacturer and supplier of interior components to the RV and MH industries with sales of approximately $240 million in 2006. Patrick expects to close this acquisition within four to six weeks and anticipates the acquisition will be accretive to earnings in 2007.
We share the view that the MH industry is showing positive signs, including reports of a rise in mortgage applications, though we are cautiously taking a wait-and-see approach and working on holding our costs in line with revenues, said Hassler. Likewise, the RV industry continues to face challenges from higher fuel prices. Despite these challenges in our markets, we will continue to execute our strategic plan based on market penetration, enhanced capacity utilization, improving operating efficiencies, product development and the exploration of strategic and accretive acquisition opportunities.
Hassler concluded: While this was a difficult period because of market softness and higher costs, the real story of our 2007 first quarter was the execution of our acquisition strategy within our strategic plan, including American Hardwoods, Inc. and Adorn LLC. We have been patient and disciplined in our approach and due diligence, and both companies fit within our criteria of immediate earnings accretion, reasonable multiples, experienced and quality-driven management teams, strategic fits with our existing businesses, diversification of products and strong market positions with quality customer relationships.
About Patrick Industries
Patrick Industries, Inc. (www.patrickind.com) is a major manufacturer of component products and a distributor of building products serving the Manufactured Housing, Recreational Vehicle, kitchen cabinet, home and office furniture, fixture and commercial furnishings, marine, and other Industrial markets and operates coast-to-coast through locations in 12 states. Patricks major manufactured products include cabinet and wall components, countertops, adhesives, and aluminum extrusions. The Company also distributes drywall and drywall finishing products, interior passage doors, flooring, vinyl and cement siding, ceramic tile, high pressure laminates, and other miscellaneous products.
Forward-Looking Information
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities for existing products, plans and objectives of management, markets for the Companys common stock and other matters. Statements in this press release that are not historical facts are forward-looking statements for the purpose of the safe harbor provided by Section 21E of the Exchange Act and Section 27A of the Securities Act. Forward-looking statements, including, without limitation, those relating to our future business prospects, revenues and income, wherever they occur in this press release, are necessarily estimates reflecting the best judgment of our senior management at the time such statements were made, and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by forward-looking statements. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. You should consider forward-looking statements, therefore, in light of various important factors, including those set forth in this press release. There are a number of factors, many of which are beyond the Companys control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors include pricing pressures due to competition, costs and availability of raw materials, availability of retail and wholesale financing for manufactured homes, availability and costs of labor, inventory levels of retailers and manufacturers, levels of repossessed manufactured homes, the financial condition of our customers, interest rates, oil and gasoline prices, the outcome of litigation, volume of orders related to hurricane damage and operating margins on such business, and adverse weather conditions impacting retail sales. In addition, national and regional economic conditions and consumer confidence may affect the retail sale of recreational vehicles and manufactured homes.
###
Contact:
Ryan McGrath, Jeff Lambert
Lambert, Edwards & Associates, Inc.
616-233-0500 / rmcgrath@lambert-edwards.com
PATRICK INDUSTRIES, INC.
UNAUDITED FINANCIAL HIGHLIGHTS
|
INCOME STATEMENT |
(dollars in 000s except per share amounts) |
THREEMONTHS ENDED | |||
|
March 31, | |||
|
|
2007 |
|
2006 |
|
|
|
|
|
Net sales |
|
$78,148 |
|
$89,281 |
Cost of goods sold |
|
69,334 |
|
78,279 |
|
|
|
|
|
Gross profit |
|
8,814 |
|
11,002 |
|
|
|
|
|
Warehouse and delivery expenses |
|
3,767 |
|
4,020 |
Selling, general, and administrative expenses |
|
5,576 |
|
5,437 |
|
|
|
|
|
Operating income (loss) |
|
(529) |
|
1,545 |
Financial expense, net |
|
571 |
|
334 |
|
|
|
|
|
Income (loss) before income taxes |
|
(1,100) |
|
1,211 |
Income taxes (credit) |
|
(446) |
|
505 |
|
|
|
|
|
NET INCOME (LOSS) |
|
($654) |
|
$706 |
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) PER COMMON SHARE |
|
($0.13) |
|
$0.15 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
4,906 |
|
4,832 |
BALANCE SHEET
|
|
2007 |
|
2006 |
CURRENT ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$455 |
|
$436 |
Trade receivables, net |
|
23,351 |
|
24,242 |
Inventories |
|
42,754 |
|
38,236 |
Prepaid expenses |
|
1,342 |
|
1,382 |
Deferred tax assets |
|
953 |
|
1,141 |
|
|
|
|
|
Total current assets |
|
68,855 |
|
65,437 |
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, NET |
|
46,627 |
|
39,180 |
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS |
|
3,011 |
|
3,064 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$118,493 |
|
$107,681 |
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Current maturities of long-term debt |
|
$3,217 |
|
$2,767 |
Short-term borrowings |
|
10,000 |
|
- - - |
Accounts payable and accrued liabilities |
|
16,226 |
|
22,213 |
|
|
|
|
|
Total current liabilities |
|
29,443 |
|
24,980 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT LESS CURRENT MATURITIES |
|
20,339 |
|
16,055 |
|
|
|
|
|
|
|
|
|
|
DEFERRED LIABILITIES AND OTHER |
|
3,046 |
|
2,873 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS EQUITY |
|
65,665 |
|
63,773 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
|
$118,493 |
|
$107,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|