Re:

Patrick Industries, Inc.

Form 10-K for the Year Ended December 31, 2013

Definitive Proxy Statement on Schedule 14A (filed April 28, 2014)

1.

As part of your risk factor disclosures, you indicate on page 16 that the loss of any of your large customers could have a material adverse impact on your operating results. Please refer to Item 101(C)(1)(vii) of Regulation S-K and tell us how you considered disclosing the names of the two RV customers that accounted for over 50% of your consolidated net sales during both 2012 and 2013.

RESPONSE: The Company's recreational vehicle (“RV”) segment products include consolidated sales to two major manufacturers of RVs who each account for over 10% of consolidated net sales - Forest River, Inc. (a Berkshire Hathaway Company) (“Forest River”) and Thor Industries, Inc. (stock symbol: THO) (“Thor”). There were no other customers that accounted for more than 10% of consolidated net sales for the years ended December 31, 2012 and 2013. Both Forest River and Thor are comprised of various operating subsidiaries and brand names that operate within the parent company.

For the years ended December 31, 2012 and 2013, our combined sales to Forest River and Thor, on a consolidated basis of their operating subsidiaries and brands, together accounted for 54% and 57% of our consolidated net sales, respectively, as indicated in our risk factor disclosures on page 16 and in the Major Customers section of Note 20 to the Consolidated Financial Statements in our 2013 Form 10-K.

In future annual filings, we will identify the specific names of the customers who accounted for 10% or more of consolidated net sales pursuant to Item 101(C)(1)(vii) of Regulation S-K in the Major Customers section of the “Segment Information” footnote to the consolidated financial statements in our Form 10-K for the applicable reporting periods.

For example, the Major Customers section on page F-39 of our 2013 Form 10-K would be revised as follows:

“The Company had one RV customer that accounted for approximately 28% and 30% of the trade receivables balance at December 31, 2013 and 2012, respectively. There were no other customers that accounted for more than 10% of the trade receivables balance at December 31, 2013 and 2012. The Company had two customers in the RV market that each accounted for over 10% of consolidated net sales. Forest River, Inc. and Thor Industries, Inc. together accounted for 57%, 54% and 49%, in the aggregate, of consolidated net sales for the years ended December 31, 2013, 2012 and 2011, respectively.”

2.

We note that your MD&A quantifies the incremental contribution that acquisitions made to net sales during both 2012 and 2013. Please tell us how you considered providing similar disclosures to quantify the impact of acquisitions on other financial statement line items.

3.

You disclose on page 43 that you commenced a project to replace and upgrade your ERP system and that this system is expected to result in modifications to your internal controls. We remind you that if your ERP implementation results in any material changes to internal controls over financial reporting, you should provide any disclosures required by Item 308(c) of Regulation S-K.

4.

Acquisitions, page F-12

4.

Please revise future filings to disclose earnings attributable to acquirees after the acquisition date as required by ASC 805-10-50-2(h)(1).

5.

Please revise future filings to disclose the amount and location of acquisition costs as required by ASC 805-10-50-2(f).

6.

Please tell us how you considered disclosing the amount of revenues from external customers by product type for all periods presented. We note that some product sales figures for the year ended December 31, 2013 are provided on page seven. Please refer to ASC 280-10-50-40.

Accordingly, the Company believes that disclosure of the amount of revenues from external customers by product type within each of our reportable operating segments is impracticable because it is not consistent with our method of internal reporting to the chief operating decision maker. As such, the Company does not intend to provide disclosure of its revenues by product type in its annual filings.

7.

Please tell us and in future filings disclose how the compensation committee has considered the results of the most recent shareholder advisory vote on executive compensation and how that consideration has affected the executive compensation decisions and policies. For guidance, please refer to Item 402(b)(1)(vii) of Regulation S-K.

8.

We note reference to “the Company’s peer group” on page 22 as well as reference to “benchmark studies and analyses” on page 20. In future filings please identify the peer group companies against which you have benchmarked your compensation and other relevant components to your benchmarking analysis. Refer to Item 402(b)(2)(xiv) of Regulation S-K.

RESPONSE: Patrick’s benchmark peer group for the period ended December 31, 2013 consisted of the following companies:  American Woodmark Corporation, Cavco Industries, Inc., Flexsteel Industries, Inc., Commercial Vehicle Group Inc., Winnebago Industries, Inc., Drew Industries Incorporated, Stoneridge, Inc., Twin Disc, Incorporated, Haynes International, Inc., Accuride Corporation, Spartan Motors, Inc., PGT, Inc., and Shiloh Industries, Inc.   Patrick utilized Durable Goods Manufacturing data provided by Towers Watson, our independent compensation committee consultant, for determining base salary adjustments for our NEOs.

In future filings, we will identify and disclose the peer group companies against which we have benchmarked our compensation and other relevant components to our benchmarking analysis in the “Compensation Components – Mix and Levels” section of our Proxy Statement similar to that described above.

9.

We note your disclosure that in 2013 the company achieved a “4.4 Company performance rating,” one of the two components of STI. Supplementally, please tell us and in future filings, please disclose the actual individual performance rating for each NEO. For each NEO, please identify the strategic, leadership and talent objectives and the factors that the compensation committee took in consideration in determining whether these objectives were achieved.

“Each NEO’s individual performance rating takes into account three categories of performance objectives in assessing the personal performance of the NEOs named in the Summary Compensation Table for 2013 against individual objectives: (i) financial performance including revenue targets, EBITDA targets and an optional financial goal approved by the Company’s Compensation Committee and by the Chief Executive Officer (“CEO”); (ii) two or three strategic objectives linked to the Company’s strategic plan which include, among others: (a) improving the revenue and profitability of business units under the leadership and control of the NEO; (b) the introduction of new product lines and product line extensions to achieve target revenue growth levels and market share; and (c) the ongoing evaluation of strategic opportunities related to our capital allocation strategy and the execution of those opportunities, as appropriate; and (iii) objectives linked to developing and managing talent consistent with the Company’s values, and enhancing and developing the leadership capabilities of the Company’s future leaders.  The financial objectives are the same for each NEO and linked directly to the plan year goals.  The strategic objectives are specific for each NEO, but are linked to the strategic plan and that year’s organizational strategic agenda.  Finally, the talent, values and leadership objectives are also tailored for each NEO according to the specific areas of focus for the individual NEO and their respective areas of responsibility.

The individual objectives for the NEOs are initially developed by each NEO to guide their planned respective contribution toward the Company’s strategic and financial goals for the plan year, and reviewed and approved by either the CEO or by the Board of Directors, in the CEO’s case. 

In assessing the NEOs’ individual performance, the Compensation Committee is provided with detailed quantitative documentation substantiating individual performance against each individual objective. The Compensation Committee looks to the CEO’s performance assessments of the other NEOs and his recommendations regarding a performance rating for each, as well as input from the non-management Board members. These recommendations may be adjusted by the Compensation Committee prior to finalization. The personal performance assessment of our CEO is determined by the Compensation Committee with input from the non−management members of the Board.

10.

You disclose that the 2013 LTIP implemented a “performance dependent upside potential for performance in excess of target.” With a view towards future disclosure, please tell us how the award potential differs from the supplemental cash appreciation provision under the 2011 LTIP. In addition, please discuss whether this award will be settled in stock or cash, and whether there are any parameters within which the upside potential award will be granted.

RESPONSE: The 2011 LTIP included a cash appreciation component to the award to reflect a market competitive position for long-term incentive compensation.  The Compensation Committee recognized through its evaluation of peer proxy data and other market data, that the competitive LTI award (expressed as a $ target percentage of base compensation) for each NEO could not be reached with a share grant only while maintaining an appropriate “burn rate” (i.e., shares granted to management as part of compensation plans in a given year as a percentage of shares outstanding) for the 2011 LTIP year as a result of the Company’s low stock price at the time.  Given the Compensation Committee’s objective of incentivizing the NEOs through the LTIP, the Compensation Committee added a supplemental cash appreciation component to the 2011 LTIP to better align the target $ award to the market data.  The cash appreciation award was adopted to mirror an equivalent number of shares reflecting the cash award divided by share value at grant date.  The actual payout was determined based on (i) the number of equivalent shares earned as a result of actual cumulative EBITDA over the three-year plan period versus target EBITDA and (ii) share price appreciation over the plan period, up to a maximum of 200% of the cash target award.  This award was settled in cash at the conclusion of the plan period (December 31, 2013).  This plan design was a one-time design event for the 2011 plan and has not been included in subsequent LTIP plans. However, if future LTIP plans include supplemental cash appreciation award potential, we will revise future filings accordingly to provide the additional disclosure.

The 2013 LTIP is separate from the 2011 LTIP.  As the market value of shares increased from the 2011 LTIP grant date to the 2013 LTIP grant date, the subsequent burn rate analysis allowed for the 2013 LTIP to be awarded entirely in shares versus a combination of shares and cash.  Thus, the Compensation Committee made the decision to provide appropriate incentives and “upside” potential for each NEO if performance goals are exceeded during the course of the three year cumulative performance period.  This award will be settled in stock only at the conclusion of the three-year performance period ending on December 31, 2015.

In future filings, we will provide similar disclosure as that provided above for the 2013 LTIP and discuss whether the award for the current plan year will be settled in stock or cash, and whether there are any parameters within which the upside potential award will be earned, where applicable.

11.

Please revise future filings to provide the disclosures required by ASC 220-10-45-18.

RESPONSE: The Company adopted the two-statement approach to presenting the components of other comprehensive income in its first quarter 2012 financial statements as required by ASC 220-10-45-18. For each interim period in 2012 and 2013 and for the respective annual periods of each of these years, the Company presented the consolidated statements of comprehensive income following the presentation of the consolidated statements of income for all required periods.

The only non-owner change in stockholders’ equity to be presented in the statement of comprehensive income is the change in the Company’s accumulated pension obligation which is calculated and recorded on an annual basis only, given that the total liability for the Company’s pension plan represents less than 1% of consolidated liabilities and the annual pension expense represents less than 1% of consolidated net income as of and for the years ended December 31, 2012 and 2013.

12.

We note you present the non-GAAP measure, EBITDA. Please revise future presentations to reconcile this measure to the most directly comparable GAAP measure, which appears to us to be net income, as required by Item 10(e)(i)(B) of Regulation S-K.

RESPONSE: The following disclosure in tabular format will be included in our future presentations beginning with the Company’s Report on Form 8-K for the third quarter of 2014 as furnished to the SEC on November 18, 2014 in which the non-GAAP measure, EBITDA, is reconciled to the GAAP measure, net income, for the third quarter and nine months periods ended September 28, 2014 and September 29, 2013, as required by Item 10(e)(i)(B) of Regulation S-K:

($ in thousands)

3Q '13

9M '13

3Q '14

9M '14

Reported net income (GAAP)

Adjustment factors:

Interest expense

Income taxes

Depreciation

Amortization of intangibles

Stock compensation expense

(Gain) loss on sale fixed assets

Acquisition transaction-related expenses & other

EBITDA