Patrick Industries (PATK) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales rose 10% year-over-year to $1.02 billion, with net income up 13% to $48 million and diluted EPS of $2.16, driven by strong RV (+17%), Housing (+11%), and Powersports growth, offsetting a 30% Marine revenue decline.

• Adjusted EBITDA grew 14% to $130 million, with margin expanding 40 basis points to 12.8%.

• Strategic diversification, acquisitions (notably Sportech), and cost management supported revenue and margin expansion.

• Free cash flow (TTM) was $348 million; net leverage ratio at 2.6x with $519 million liquidity.

• Automation initiatives and ongoing investments improved operations and supported continued growth.

Financial highlights

• Gross profit rose 10% to $231 million, with gross margin steady at 22.8%; operating income increased 12% to $85 million and operating margin improved to 8.3%.

• SG&A expenses rose 6% to $84 million, mainly due to acquisitions, but declined as a percentage of sales.

• Free cash flow for the quarter was $121 million; trailing twelve months totaled $348 million.

• Paid down $82 million in debt during the quarter, reducing net leverage ratio to 2.6x.

• Total debt at $1.33 billion as of June 30, 2024.

Outlook and guidance

• 2024 RV wholesale unit shipment outlook revised to 320,000-330,000 units; marine wholesale unit shipments expected to decline 20%-25%; manufactured housing shipments forecasted up 5%-10%; residential housing starts flat to up 5%.

• Full-year operating margin expected flat to up 20 basis points; operating cash flow guidance $390-$410 million.

• Management expects continued market share gains and strategic acquisitions to drive performance as end markets recover.

• Focus remains on organic growth, cost discipline, and innovation amid volatile macroeconomic conditions.

• Available liquidity and net leverage near target range position the company for further acquisitions.