Published on April 29, 2010
For
Immediate Release
Patrick
Industries, Inc. Reports First Quarter 2010 Financial Results
ELKHART,
IN – April 29, 2010 – Patrick Industries, Inc. (NASDAQ: PATK), a major
manufacturer and distributor of building and component products for the
recreational vehicle (RV), manufactured housing (MH) and industrial markets,
today reported increased sales and net income for the first quarter
ended
March 28,
2010.
For the
first quarter of 2010, Patrick reported a 41% increase in net sales to $63.5
million from $44.9 million in the same period in 2009, based largely on
improving conditions in the RV industry, which represented approximately 62% of
the Company’s sales in the quarter. Wholesale unit shipments in the
RV industry increased approximately 97% in the first quarter of 2010 versus the
prior year period. The Company estimates that unit shipments in the
MH industry, which represented approximately 25% of the Company’s consolidated
sales in the first quarter of 2010, were down approximately 7% from the first
quarter of 2009, marking the sixteenth consecutive quarter of declining
shipments compared to prior periods. The industrial market sector,
which accounted for approximately 13% of the Company’s first quarter sales and
is tied to the residential housing market, began to show signs of improvement in
the first quarter of 2010 with new housing starts increasing approximately 20%
from the first quarter of 2009 on a seasonally adjusted basis. Sales
to this market generally lag new residential housing starts by six to twelve
months.
“Increased
sales volume and stable fixed manufacturing costs contributed to an 80% increase
in our gross profit for the quarter compared to the first quarter of
2009. Gross profit improved as a percent of net sales to 10.2% in
2010 from 8.0% in 2009. Operating expenses as a percent of net sales
improved on increased sales volume reflecting our ability to leverage our
resources and not add significant incremental fixed costs to accommodate
increased revenues,” said Todd Cleveland, President and CEO. Total
warehouse and delivery and selling, general and administrative expenses as a
percent of net sales were 10.1% in the first quarter of 2010 compared to 14.1%
in 2009.
Net
income also improved from the prior period to $0.9 million, or $0.09 per diluted share in the
first quarter of 2010 from a loss of $4.1 million, or $0.45 per diluted share in
the first quarter of 2009. First quarter 2010 net income included an
after-tax net gain of approximately $2.8 million, or $0.28 per diluted share on
the sale of the Company’s Oregon and California facilities, and a non-cash
charge of approximately $0.3 million, or $0.03 per diluted share related to
mark-to-market accounting for common stock warrants. Discontinued
operations in first quarter 2009 primarily reflected a net after-tax gain of
$0.3 million, or $0.03 per diluted share, on the sale of certain
assets and business of American Hardwoods, Inc.
“We are
cautiously optimistic about the recent trends in two of the primary markets we
serve. The RV industry continued to show signs of recovery in the
first quarter of 2010. While the MH industry continues to be
negatively impacted by a lack of financing and the availability of credit, the
residential housing market showed signs of improvement in the first quarter of
2010,” said Mr. Cleveland. “The current momentum and strength in the
RV industry, which began in the fourth quarter of 2009, coupled with our lean
operating structure, dedicated team members and business partners, and focused
approach, has helped us improve both our sales and profitability quarter over
quarter, and set the stage for us to be able to take advantage of further
improvements in the marketplace. Additionally, in the first quarter,
we completed the sale of two of our manufacturing and distribution facilities in
Oregon and California and used the proceeds to further reduce our leverage
position. Furthermore, we completed the acquisition of a cabinet door
business and moved production into one of our existing
facilities. This acquisition, our first since the acquisition of
Adorn in 2007, provided a significant amount of new cabinet door business and
contributed to the expansion of our revenue base compared to the prior year,”
Cleveland further stated.
From
January 1, 2010 to March 31, 2010, the Company paid down approximately $9.1
million in principal on its term loan, of which approximately $8.3 million was
funded by the net proceeds from the sale of the Company’s Oregon and California
facilities. The Company is currently continuing to operate in both
facilities under a license agreement and lease agreement,
respectively.
As
previously disclosed in the 2009 Form 10-K, the Company is working to refinance
or replace its existing credit facility, which is scheduled to expire on January
3, 2011. Since the Company did not enter into a financing agreement
with its bank lenders before the issuance of the balance sheet for the first
quarter of 2010, generally accepted accounting principles require that all of
the Company’s outstanding long-term indebtedness as of March 28, 2010 be
classified as a short-term liability until such time as the refinancing or
replacement of the current credit facility is completed.
“While we
anticipate that the residual effects of the economic downturn will potentially
continue throughout the remainder of 2010, particularly in the MH market sector,
we are energized as we continue to expand our product offerings through the
addition of new product lines and potential acquisitions, execute on our
organizational strategic agenda, and further drive our ‘Customer First’
performance oriented culture,” said Mr. Cleveland.
About
Patrick Industries
Patrick
Industries, Inc. (www.patrickind.com)
is a major manufacturer of component products and distributor of building
products serving the recreational vehicle, manufactured housing, kitchen
cabinet, household furniture, fixtures and commercial furnishings, marine, and
other industrial markets and operates coast-to-coast through locations in 12
states. Patrick’s major manufactured products include decorative
vinyl and paper panels, wrapped mouldings, cabinet doors and components,
interior passage doors, slotwall and slotwall components, and
countertops. The Company also distributes drywall and drywall
finishing products, electronics, adhesives, cement siding, interior passage
doors, roofing products, laminate flooring, and other miscellaneous
products.
Forward-Looking
Statements
This
press release contains certain statements related to future results, or states
our intentions, beliefs and expectations or predictions for the future, which
are forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
involve a number of risks and uncertainties that could cause actual results to
differ materially from either historical or anticipated results depending on a
variety of factors. Potential factors that could impact results
include: pricing pressures due to competition, costs and availability
of raw materials, availability of commercial credit, availability of retail and
wholesale financing for residential and manufactured homes, availability and
costs of labor, inventory levels of retailers and manufacturers, levels of
repossessed residential and manufactured homes, the financial condition of our
customers, the ability to generate cash flow or obtain financing to fund growth,
future growth rates in the Company’s core businesses, interest rates, oil and
gasoline prices, the outcome of litigation, adverse weather conditions impacting
retail sales, our ability to remain in compliance with our credit agreement
covenants, and our ability to refinance or replace our credit
facility. In addition, national and regional economic conditions and
consumer confidence may affect the retail sale of recreational vehicles and
residential and manufactured homes. 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. Further
information regarding these and other risks, uncertainties and factors is
contained in the section entitled “Risk Factors” in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2009, and in the
Company's Form 10-Qs for subsequent quarterly periods, which are filed with
the Securities and Exchange Commission (“SEC”) and are available on the SEC’s
website at www.sec.gov.
###
2
Contact:
Julie Ann
Kotowski
Patrick
Industries, Inc.
574-294-7511 / kotowskj@patrickind.com
3
|
(thousands except per share data)
|
FIRST QUARTER
ENDED
|
|||||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
March
28,
2010
|
March
29,
2009
|
||||||
|
NET
SALES
|
$ | 63,500 | $ | 44,915 | ||||
|
Cost
of goods sold
|
57,022 | 41,323 | ||||||
|
Gross
profit
|
6,478 | 3,592 | ||||||
|
Operating
expenses:
|
||||||||
|
Warehouse
and delivery
|
2,634 | 2,677 | ||||||
|
Selling,
general and administrative
|
3,806 | 3,665 | ||||||
|
Amortization
of intangible assets
|
126 | 88 | ||||||
|
Gain
on sale of fixed assets
|
(2,791 | ) | (11 | ) | ||||
|
Total
operating expenses
|
3,775 | 6,419 | ||||||
|
OPERATING
INCOME (LOSS)
|
2,703 | (2,827 | ) | |||||
|
Stock
warrants revaluation
|
282 | (60 | ) | |||||
|
Interest
expense, net
|
1,511 | 1,838 | ||||||
|
Income
(loss) from continuing operations before income tax
benefit
|
910 | (4,605 | ) | |||||
|
Income
tax benefit
|
- | (174 | ) | |||||
|
Income
(loss) from continuing operations
|
910 | (4,431 | ) | |||||
|
Income
from discontinued operations
|
- | 459 | ||||||
|
Income
taxes
|
- | 174 | ||||||
|
Income
from discontinued operations, net of tax
|
- | 285 | ||||||
|
NET
INCOME (LOSS)
|
$ | 910 | $ | (4,146 | ) | |||
|
BASIC
NET INCOME (LOSS) PER COMMON SHARE:
|
||||||||
|
Continuing
operations
|
$ | 0.10 | $ | (0.48 | ) | |||
|
Discontinued
operations
|
- | 0.03 | ||||||
|
Net
income (loss)
|
$ | 0.10 | $ | (0.45 | ) | |||
|
DILUTED
NET INCOME (LOSS) PER COMMON SHARE:
|
||||||||
|
Continuing
operations
|
$ | 0.09 | $ | (0.48 | ) | |||
|
Discontinued
operations
|
- | 0.03 | ||||||
|
Net
income (loss)
|
$ | 0.09 | $ | (0.45 | ) | |||
|
Weighted
average shares outstanding - Basic
|
9,270 | 9,114 | ||||||
|
-
Diluted
|
9,852 | 9,114 | ||||||
4
|
(thousands)
|
||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
March
28,
2010
|
Dec.
31,
2009
|
||||||
|
(Unaudited)
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 154 | $ | 60 | ||||
|
Trade
receivables, net
|
21,819 | 12,507 | ||||||
|
Inventories
|
21,036 | 17,485 | ||||||
|
Prepaid
expenses and other
|
5,843 | 1,981 | ||||||
|
Assets
held for sale
|
- | 4,825 | ||||||
|
Total
current assets
|
48,852 | 36,858 | ||||||
|
Property,
plant and equipment, net
|
25,547 | 26,433 | ||||||
|
Goodwill
|
2,861 | 2,140 | ||||||
|
Intangible
assets, net
|
7,544 | 7,047 | ||||||
|
Deferred
financing costs, net
|
1,113 | 1,463 | ||||||
|
Other
non-current assets
|
3,051 | 3,096 | ||||||
|
TOTAL
ASSETS
|
$ | 88,968 | $ | 77,037 | ||||
|
CURRENT
LIABILITIES
|
||||||||
|
Current
maturities of long-term debt
|
$ | 24,958 | $ | 10,359 | ||||
|
Short-term
borrowings
|
18,000 | 13,500 | ||||||
|
Accounts
payable
|
14,709 | 5,874 | ||||||
|
Accrued
liabilities
|
5,979 | 5,275 | ||||||
|
Total
current liabilities
|
63,646 | 35,008 | ||||||
|
Long-term
debt, less current maturities and discount
|
- | 18,408 | ||||||
|
Deferred
compensation and other
|
6,648 | 5,963 | ||||||
|
Deferred
tax liabilities
|
1,309 | 1,309 | ||||||
|
TOTAL
LIABILITIES
|
71,603 | 60,688 | ||||||
|
SHAREHOLDERS’
EQUITY
|
17,365 | 16,349 | ||||||
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 88,968 | $ | 77,037 | ||||
5