On this page of StockholderLetter.com we present the 4/10/2023 shareholder letter from PATRICK INDUSTRIES INC — ticker symbol PATK. Reading current and past PATK letters to shareholders can bring important insights into the investment thesis.

 •  4/10/2023 Letter Continued (Full PDF)
 •  4/1/2024 PATK Stockholder Letter
 •  4/1/2025 PATK Stockholder Letter
 •  3/30/2026 PATK Stockholder Letter
 •  More "Auto Parts" Category Stockholder Letters
 •  PATK Benford's Law Stock Score = 64

PATK 4/10/2023 Shareholder/Stockholder Letter Transcript:

SELECTED FINANCIAL DATA
As of or for the Year Ended December 31
(thousands except per share amounts)
2022
Net sales
2021
2020
$4,881,872
$4,078,092
$2,486,597
1,059,938
801,194
459,017
Warehouse & delivery expenses
163,026
139,606
98,400
Selling, general & administrative expenses
327,513
253,547
146,376
Operating income
496,170
351,712
173,373
Net income
328,196
224,915
97,061
13.49
9.63
4.20
673,596
530,774
326,349
Total assets
2,782,471
2,650,731
1,753,435
Total debt
1,298,414
1,360,625
840,000
Shareholders    equity
955,169
767,557
559,441
Net cash provided by operating activities
411,738
252,130
160,153
1.44
1.17
1.03
Gross profit
Diluted net income per common share
Proforma adjusted EBITDA (1)
Cash dividends paid per common share
(1)
 -*!*-(    %0./          $.   )*)         ) ) $ ' (  .0-    
INVESTOR INFORMATION
Net Sales ($ Millions)
Net Income ($ Millions)
Diluted Net Income per Common Share
2018
2018
2018
2019
2019
2019
2020
2020
2020
2021
2021
2021
2022
$4,882
$328
2022
2022
Working Capital ($ Millions)
Stock Price At December 31st
Operating Cash Flows ($ Millions)
2018
2018
2018
2019
2019
2019
2020
2020
2020
2021
2021
2021
2022
$572
2022
$60.60
2022
$13.49
$412

DEAR
SHAREHOLDERS
Fiscal 2022 was another record year for our Company as the business
model we have strategically built over the last several years powered
our diversified resilience through one of the most dynamic years in
recent memory. Our team   s adherence to our brand-based go to market
strategy, core values, and our capital allocation strategy continued to
pay off, allowing us to thrive in an ever-changing market.
At the heart of our success are our dedicated and passionate team
members, who have risen to the occasion time and time again.
Their unwavering commitment to excellence, leadership, and our
entrepreneurial culture have established Patrick as a best-in-class
component solutions provider to the RV, marine and housing markets.
Over the past five years, we have implemented significant
infrastructure, automation, and leadership initiatives to ensure
our Company is better equipped to perform well no matter the
macroeconomic environment. And indeed, our Patrick model was
put to the test in the second half of 2022 as we successfully navigated
volatile market conditions across our market sectors.
IN 2022, PATRICK
STRATEGICALLY
ALLOCATED $439
MILLION OF CAPITAL
TO ACQUISITIONS,
CAPITAL
EXPENDITURES,
STOCK BUYBACKS
AND DIVIDENDS TO
SHAREHOLDERS.
A MORE RESILIENT PATRICK
Building a More Diverse Portfolio with
Higher-Margin & Higher-Value Products
Customer Focused
Leadership
Our diverse portfolio of products spans three key end
markets RV, marine and housing and allows us to
weather the uncertainties of the global economy and
maintain more resilient margins and operating profile.
This platform is bolstered by our investment in
higher-engineered and higher-margin products, and
our ability to offer an innovative solutions-based
model for our customers.
We strive to provide our customers with a complete
quality and service-based experience. We believe our
success is directly tied to our customer partnerships
and ability to understand and anticipate our
customers    needs and deliver exceptional products
and services that exceed their expectations.
A Strong Financial Foundation
that Supports Company Goals
Unlocking Next-Level
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AGILITY IN ACTION
Our scalability and diverse portfolio of products
have never been more relevant in our leisure lifestyle
and housing markets, with more people than ever
appreciating the benefits of connecting outdoors,
coupled with the need to address our country   s acute
shortage of affordable housing.
The macroeconomic landscape remains uncertain,
with rising interest rates and inflation posing near-term
challenges for many households and businesses.
Although these periods can be challenging, they also
unlock opportunities for growth and gaining market
share. Despite the unpredictability of the market, we
remain proactive in managing the variables we can
control while remaining vigilant and prepared for
market conditions to improve. Our highly variable cost
structure allows us to implement defensive measures
when necessary, while maintaining readiness to flex our
operating model to take advantage of opportunities to
drive long-term value for our shareholders.
END MARKET INSIGHTS
In the RV market, production started off strong in 2022,
with OEMs then demonstrating incredible discipline in
the back half of the year as demand decreased following
an explosive year and a half for the industry. Despite
a considerable tightening of production, 2022 was
still the third-best year for wholesale unit shipments.
We continue to believe in the long-term growth of the
industry as we see long-lasting demographic shifts
with more people experiencing the value of the great
outdoors in an RV.
In the marine market, our group continued to focus
on acquiring and growing our portfolio of
margin-accretive higher-value products. Our marine
businesses are now significantly weighted to the
fiberglass, saltwater and pontoon segments, with an
increased presence in the aftermarket, further expanded
by our 2022 acquisitions, including Rockford Fosgate,
Diamondback Towers and Transhield.
Finally, our focus on affordable housing proved positive
in our housing market businesses, as many consumers
seek options in the face of rising interest rates and
inflation.
2022 HIGHLIGHTS
    Additional strategic acquisitions helped drive our
revenue from the marine OEM market and marine
aftermarket to over $1 billion for the first time
    Expanded our existing senior secured credit facility
to $925 million from $700 million, enhancing our
ability to execute on our business strategy
    Generated $412 million in operating cash flows, which
provided us with the liquidity to effectively meet
customer needs, and invest in our businesses and
other strategic initiatives while continuing to return
cash to shareholders
    Released our inaugural Responsibility and
Sustainability Report as we continue to focus
on making a positive impact on the world around us
    Returned $110 million to shareholders including
share repurchases of $77 million, and dividends
of $33 million after our Board   s decision in November
to increase our quarterly dividend by 36% to $0.45 per
share
    Expanded our philanthropic reach and influence
through investments and new partnerships with more
than 50 local community and national organizations
including LOGAN, Military Makeover with Montel  ,
Habitat for Humanity, Care Camps, and many
other purpose-based initiatives for which our team
members are passionate

CAPITAL ALLOCATION AND FURTHERING
OUR DIVERSIFICATION STRATTEGY
We invested $80 million in capital expenditures
in 2022 with a focus on investments in automation
and innovation initiatives. We expect to invest
another $65 million to $75 million in 2023 with an eye
on similar projects.
We were successful in further diversifying our portfolio
through acquisitions, adding three new companies
to our portfolio and increasing our penetration in the
aftermarkeet space. This includes the acquisition
of Transhieeld, a manufacturer of protective covers
for the marrine, RV and industrial end markets;
Diamondb
back Towers, a manufacturer of premium
wakeboard
d/ski towers for Marine OEMs; and Rockford
Fosgate, which provides high-performance audio
solutions, all of which further enhance our capability
to serve cu
ustomers in the marine and marine
aftermarkeet.
BETTER TOGETHER
At Patrick, our success is due to the continued dedication,
hard work, and expertise of our team members. Our
customer-focused commitment is only possible because
of our team   s ability to deliver high-quality products and
excellent customer service. We take great pride in our
human capital management practices and continuously
invest in our team   s development, training, and
well-being.
We firmly believe that leadership takes many forms and
is found at every level of our organization, from the daily
decisions made by those who lead our production lines
and ensure the quality of our products, to the larger-scale
decisions made by our key executive leadership team.
We encourage a culture of innovation and continuous
improvement, where every team member is empowered
to contribute to Patrick   s success.
As we loo
ok ahead to 2023, we are confident that our
team will continue to deliver exceptional results.
We will staay true to our BETTER Together culture
and our customer-focused initiatives while
continuin
ng to diversify our portfolio and pursuing
growth op
pportunities in our end markets. We will
also contiinue to invest in automation and other
initiativess that will increase efficiencies and drive
profitabiliity in the future.
In closingg, we want to express our gratitude to our
team mem
mbers, customers, and shareholders for
their conttinued support. We continue to be excited
about thee future of Patrick Industries and remain
committeed to delivering value for all stakeholders.
Todd M. Cleveland
Andyy L. Nemeth
Chairman of the Board
Chief Executive Officer

4/10/2023 Letter Continued (Full PDF)

 

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