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Patrick Industries, Inc. Reports Third Quarter and Nine Months 2013 Financial Results

Patrick Industries, Inc. Reports Third Quarter and Nine Months 2013 Financial
                                   Results

PR Newswire

ELKHART, Ind., Oct. 24, 2013

ELKHART, Ind., Oct. 24, 2013 /PRNewswire/ --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 its financial results for the third quarter
and nine months ended September 29, 2013.

Third Quarter 2013 Financial Results

Net sales for the third quarter of 2013 increased $33.7 million or 29.8%, to
$146.6 million from $112.9 million in the same quarter of 2012. The increase
was primarily attributable to a 35% increase in the Company's revenue from the
RV industry, which represented approximately 70% of the Company's third
quarter 2013 sales. Sales to the MH industry increased 16%, while sales to
the industrial markets increased 25%. The Company estimates that RV industry
wholesale unit shipments increased approximately 10% in the third quarter of
2013 compared to the prior year. Additionally, the Company estimates that
wholesale unit shipments in the MH industry, which represented approximately
18% of third quarter 2013 sales, rose approximately 9% from the third quarter
of 2012. The industrial market sector, which is primarily tied to the
residential housing and commercial and retail fixtures markets, accounted for
12% of the Company's third quarter 2013 sales. The Company estimates that
approximately 60% of its industrial market sales is linked to the residential
housing sector and its sales to the industrial markets generally lag new
housing starts by approximately six to nine months.

Excluding the revenue contributions of acquisitions completed in 2012 and
2013, the Company estimates its organic growth in the third quarter of 2013 at
approximately 16%, or $17.6 million of its total revenue increase. The
Company estimates that this organic growth was comprised of growth resulting
from market share gains of approximately 6% and growth tied to overall
industry improvement of approximately 10%. The remaining $16.1 million of the
revenue increase in the third quarter of 2013 was attributable to the
incremental contribution of the 2012 and 2013 acquisitions (including related
market share and industry growth), resulting in incremental growth of
approximately 14%. As previously announced, in September 2013, the Company
acquired the business and certain assets of Frontline Mfg., Inc.
("Frontline"), Premier Concepts, Inc. ("Premier"), and West Side Furniture
("West Side").

Todd Cleveland, President and Chief Executive Officer, said, "We are pleased
with our third quarter revenue growth which was bolstered by growth in all
three of the end markets we serve. Seasonal factors consistent with recent
years, including changing production schedules related to the fall dealer show
season, competitive market conditions, and fluctuating commodity prices in
certain raw materials, reduced our gross margin in the third quarter compared
to the second quarter of 2013." Mr. Cleveland further noted, "The positive
sentiment exhibited by both dealers and OEMs during the recent RV manufacturer
open houses supports the strong momentum in this industry as we head into the
fourth quarter and into 2014. In addition, Frontline, Premier, and West Side
are an excellent fit with our existing RV, MH and industrial businesses and we
are excited to bring these three companies into the Patrick family as we
continue to focus on our goal of increasing our product offerings, market
share, and content per unit."

Patrick reported operating income of $9.0 million in the third quarter of
2013, an increase of $1.7 million or 22.8%, from the $7.3 million reported in
the prior year. Third quarter 2013 net income was $5.5 million or $0.51 per
diluted share. This compares to net income of $6.6 million or $0.60 per
diluted share in the third quarter of 2012, when the Company had an effective
tax rate of 0% due to a full valuation allowance against its deferred tax
assets.

Exclusive of an after-tax gain of $0.2 million or $0.02 per diluted share
related to the collection of a previously reserved receivable, adjusted net
income in the third quarter of 2013 would have been $5.3 million or $0.49 per
diluted share. Exclusive of a gain on sale of fixed assets and a non-cash
credit for stock warrant accounting together totaling $0.3 million or $0.03
per diluted share, and assuming the same estimated effective tax rate that was
recorded in the third quarter of 2013, adjusted net income in the third
quarter of 2012 would have been $4.0 million or $0.37 per diluted share.

Nine Months 2013 Financial Results

Net sales for the first nine months of 2013 increased $117.1 million or 35.3%,
to $448.3 million from $331.2 million in the same period in 2012. For the
first nine months of 2013, the Company's revenue from the RV industry, which
represented approximately 73% of its nine months 2013 sales, increased by
44%. The Company estimates that RV industry wholesale unit shipments
increased approximately 12% in the first nine months of 2013 compared to the
prior year. Additionally, revenues from the MH industry, which represented 16%
of the Company's nine months 2013 sales, rose 12% compared to the prior year
as wholesale unit shipments, as estimated by the Company, increased by
approximately 6%. Revenues from the industrial market increased 25% and
benefited from improved retail fixture and residential cabinet and furniture
sales. The industrial market accounted for 11% of the Company's nine months
2013 sales.

Excluding the revenue contributions of the 2012 and 2013 acquisitions, the
Company estimates its organic growth in the first nine months of 2013 at
approximately 17%, or $57.8 million of its total revenue increase. The
Company estimates that this organic growth was comprised of growth resulting
from market share gains of approximately 6% and growth tied to overall
industry improvement of approximately 11%. The remaining $59.3 million of the
revenue increase in the first nine months of 2013 was attributable to the
incremental contribution of the 2012 and 2013 acquisitions (including related
market share and industry growth), resulting in incremental growth of
approximately 18%.

For the first nine months of 2013, Patrick reported operating income of $32.3
million, an increase of $9.9 million or 44.1%, from the $22.4 million reported
in the first nine months of 2012. Nine months 2013 net income was $19.0
million or $1.76 per diluted share. For the first nine months of 2012, the
Company reported net income of $24.9 million or $2.32 per diluted share,
including the positive impact of a non-cash income tax credit of $6.7 million
or $0.62 per diluted share related to the reversal of the tax valuation
allowance against its deferred tax assets.

Exclusive of an after-tax gain on sale of fixed assets and the previously
mentioned receivable recovery together totaling $0.4 million or $0.04 per
diluted share, nine months 2013 adjusted net income would have been $18.6
million or $1.72 per diluted share. Exclusive of a net credit of $5.2 million
or $0.48 per diluted share resulting from the non-cash credit related to the
reversal of the tax valuation allowance discussed above, a gain on sale of
fixed assets and the acquisition of a business net of a non-cash charge for
stock warrant accounting, and assuming the same estimated effective tax rate
that was recorded in the first nine months of 2013, nine months 2012 net
income would have been $12.2 million or $1.14 per diluted share.

In February 2013, the Company's Board of Directors authorized a stock
repurchase program for the purchase of up to $10 million of the Company's
common stock from time to time through open market or private transactions
over the following 12 months. As of October 23, 2013, the Company had
repurchased 407,330 shares at an average price of $14.92 per share for a total
cost of approximately $6.1 million.

In 2011, as a result of the generation of taxable income, the Company began to
utilize its federal and state net operating loss carry forwards (the "NOLs")
of more than $29 million and $34 million, respectively, to offset taxable
earnings for federal and state tax purposes. At December 31, 2012, the Company
had gross federal NOLs remaining of approximately $9.8 million that it fully
utilized in the first half of 2013. In addition, at December 31, 2012, the
Company had gross state NOLs remaining of approximately $12.6 million, of
which approximately $5.5 million were remaining to be utilized as of September
29, 2013. The ability to utilize these federal and state NOLs to offset
taxable earnings over the past several years significantly enhanced the
Company's cash flows generated from its operations.

"The strong cash flows resulting from our revenue growth and operating
performance thus far in 2013 have afforded us the opportunity to continue to
strengthen our balance sheet, maintain an appropriate leverage position and
reinvest in our business through capital expenditures, stock repurchases and
acquisitions," stated Mr. Cleveland."Our organization's success is centered
on bringing the highest level of quality products and services to our
customers, and executing our strategic initiatives with the goal of further
increasing growth and profitability consistent with our expectation of
continuously increasing shareholder value. We intend to continue to pursue
acquisitions and other avenues to increase our revenues and grow our operating
income, net income, cash flows, and earnings per share through the remainder
of 2013 and into 2014." 

Mr. Cleveland further noted, "We believe the dedication of our team members
and our focus on delivering value to our customer base, in combination with
the acquisitions we have completed over the past several years, will continue
to provide positive contributions to our operating profitability and afford us
the opportunity to gain additional market share in the RV, MH and industrial
markets."

Conference Call Webcast

As previously announced, Patrick Industries will host an online webcast of its
third quarter 2013 earnings conference call that can be accessed on the
Company's website, www.patrickind.com under "Investor Relations," on Thursday,
October 24, 2013, at 10:00 a.m. Eastern time.

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 11 states. Patrick's
major manufactured products include decorative vinyl and paper laminated
panels, countertops, wrapped profile mouldings, slide out trim and fascia,
cabinet doors and components, hardwood furniture, fiberglass bath fixtures,
interior passage doors, exterior graphics, and slotwall panels and
components. The Company also distributes drywall and drywall finishing
products, electronics, wiring, electrical and plumbing products, cement
siding, interior passage doors, roofing products, laminate and ceramic
flooring, shower doors, furniture, fireplaces and surrounds, interior and
exterior lighting products, 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: the
impact of any economic downturns especially in the residential housing market,
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,
retention and concentration of significant customers, the ability to generate
cash flow or obtain financing to fund growth, future growth rates in the
Company's core businesses, the ability to effectively manage the costs and the
implementation of the new enterprise resource management system, the
successful integration of acquisitions, stock price fluctuations, interest
rates, oil and gasoline prices, the outcome of litigation, adverse weather
conditions impacting retail sales, and our ability to remain in compliance
with our credit agreement covenants. 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, except as required by law.
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, 2012, 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.

                                                                         THIRD QUARTER     NINE MONTHS
(thousands except per share data)
                                                                         ENDED             ENDED
CONSOLIDATED STATEMENTS OF INCOME                                        Sept.    Sept.    Sept.    Sept.
                                                                         29,      30,      29,      30,
(Unaudited)
                                                                         2013     2012     2013     2012
NET SALES                                                                $        $        $        $
                                                                         146,623  112,946  448,319  331,239
Cost of goods sold                                                       124,800  96,043   378,900  280,063
Gross profit                                                             21,823   16,903   69,419   51,176
Operating expenses:
Warehouse and delivery                                                   5,293    4,086    14,539   11,741
Selling, general and administrative                                      7,001    5,398    21,411   16,256
Amortization of intangible assets                                        548      342      1,588    992
(Gain) loss on sale of fixed assets & acquisition of business            6        (234)    (424)    (237)
Total operating expenses                                                 12,848   9,592    37,114   28,752
OPERATING INCOME                                                         8,975    7,311    32,305   22,424
Stock warrants revaluation                                               -        (73)     -        1,731
Interest expense, net                                                    541      830      1,615    2,465
Income before income taxes (credit)                                      8,434    6,554    30,690   18,228
Income taxes (credit)                                                    2,982    -        11,662   (6,650)
NET INCOME                                                               $ 5,452  $ 6,554  $        $
                                                                                           19,028   24,878
BASIC NET INCOME PER COMMON SHARE                                        $ 0.51   $ 0.61   $ 1.77   $ 2.38
DILUTED NET INCOME PER COMMON SHARE                                      $ 0.51  $ 0.60   $ 1.76   $ 2.32
Weighted average shares outstanding – Basic                              10,655   10,673   10,759   10,473
Diluted 10,697   10,909   10,800   10,705





(thousands)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL   Sept. 29,     Dec. 31,
POSITION
                                                 2013          2012
                                                 (Unaudited)
CURRENT ASSETS
 Cash and cash equivalents                      $   10,510  $     434
 Trade receivables, net                         35,518        17,858
 Inventories                                    55,854        46,992
 Deferred tax assets                            2,563         5,149
 Prepaid expenses and other                     4,178         3,237
 Total current assets                       108,623       73,670
Property, plant and equipment, net               40,113        37,069
Goodwill and other intangible assets, net        43,364        29,581
Deferred tax assets                              -             676
Deferred financing costs, net                    1,400         1,612
Other non-current assets                         835           861
 TOTAL ASSETS                               $ 194,335    $ 143,469
CURRENT LIABILITIES
 Accounts payable                               $  36,155   $  17,336
 Accrued liabilities                            14,872        11,816
 Total current liabilities                  51,027        29,152
Long-term debt                                   63,000        49,716
Deferred compensation and other                  3,013         3,193
Deferred tax liabilities                         468           -
 TOTAL LIABILITIES                          117,508       82,061
SHAREHOLDERS' EQUITY                             76,827        61,408
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 194,335    $ 143,469



SOURCE Patrick Industries, Inc.

Website: http://www.patrickind.com
Contact: Julie Ann Kotowski, Patrick Industries, Inc., 574-294-7511 /
kotowskj@patrickind.com