Patrick Industries, Inc.

Good morning, ladies and gentlemen, and welcome to Patrick Industries' fourth quarter 2022 earnings conference call. My name is LaTanya, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone to require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. And I will now turn the call over to Mr. Steve O'Hare, Vice President of Investor Relations. Mr. O'Hare, you may begin.

Good morning, everyone, and welcome to our call this morning. I am joined on the call today by Andy Nemeth, CEO, Jeff Rodino, President, and Jake Pekovic, CFO. Certain statements made in today's conference call regarding Patrick Industries and its operations may be considered forward-looking statements under the securities laws. There are a number of factors, many of which are beyond the company's control. which could cause the actual results and events to differ materially from those described in the forward-looking statements. These factors are identified in our press releases, our Form 10-K for the year ended 2021, and then our other filings with the Securities and Exchange Commission. We undertake no obligation to update these statements to reflect circumstances or events that occur after the date the forward-looking statements are made. I would now like to turn the call over to Andy Nemeth.

Thank you, Steve. Good morning, ladies and gentlemen, and thank you for joining us on the call today. As we reflect on another year of record operating results and financial performance in 2022, we want to first and foremost recognize our team's incredible dedication and tireless commitment to manage our business and serve our customers in light of some of the most dynamic market conditions across each of our end markets in recent memory. Fiscal 2022 was the tale of two halves, as we'll talk about, and we see the third and fourth quarters and full year 2022 is proof that our plan to build a stronger and more diversified company is working and driving margin and operating resilience. In the first half of 2022, demand trends across all end markets were solid, although economic headwinds were building. In the second half, we began to see these trends shift in the RV industry with a significant decline in RV production as the OEMs pulled back in recognition of balanced dealer inventories. Our RV OEM customers further evidenced their tremendous scalability reducing output by 48% versus the prior six-month period to address slowing retail demand. During the same period, we continued to drive content, and our marine and housing businesses remained resilient, bolstering our margins while we scaled our RV business in alignment with our revenues. It was the second half of the year that we believe proof-tested the Patrick Model and the strategies we've been executing over the last several years, namely the strategic diversification of our portfolio an intentional and opportunistic capital allocation strategy and investments in automation and infrastructure while maintaining a strong balance sheet. The strength and success of the Patrick model can be demonstrated by comparing 2022 to 2017, where shipments in 2017 were 505,000 units, and this year we finished at 493,000 units. Over the past five years, our RV sales as a percent of total Patrick revenue went from 69% in 2017 down to 53% last year. And our marine revenues went from 7% of our sales to 21% during the same period. Our net sales grew 198% from 1.6 billion in fiscal year 2017 to 4.9 billion for fiscal year 2022. Our gross margin widened 460 basis points going from 17.1% to 21.7%. And our operating cash flow quadrupled from 99 million to 412 million in 2022. Our adjusted EBITDA went from 165 million to 643 million and our adjusted EBITDA margin went from 10.1% to 13.2%. Despite the challenges we faced in 2022, it was a great year for Patrick and we are proud of the results that our team produced. In 2023, we will continue leveraging our investment and diversification strategy and expect these investments to add durable value to our portfolio of businesses. Our liquidity profile remains strong as we close 2022. We strategically increased our access to capital through the expansion of our revolver in the third quarter, and we are monetizing working capital and generating solid free cash flow, which gives us ample resources to continue to execute on our capital allocation strategy and allows us to better navigate the headwinds we may face in the coming year. Our confidence in the future is reflected in our decision to increase our quarterly dividend and share repurchase authorization in the fourth quarter. We are prepared for 2023 to be just as or even more dynamic than 2022 and stand ready from a position of strength to take advantage of the opportunities that present themselves and to face whatever challenges the year brings and navigate the myriad of scenarios we may see in the new year. Macroeconomic factors, as Jeff will discuss, will likely continue to impact consumers in 2023. However, we are committed to maintaining and leveraging the nimbleness of our structure effectively balancing the ability to efficiently meet our customers' needs while maintaining a healthy balance sheet with strong liquidity. And finally, highlighting our financials. Our fourth quarter revenues of $952 million decreased 17% or $196 million. Our net income for the quarter declined 34% to $40 million, and we earned $1.68 per diluted share. Our full year revenue was $4.9 billion, notching an increase of 20% or $804 million. Net income for the full year increased 46% to $328 million, and we earned $13.49 per diluted share. This represents a 40% improvement year over year, despite the non-cash reduction of $1.15 per share for the accounting treatment of our convertible notes. I'll now turn the call over to Jeff Rodino, who will highlight the quarter and provide more detail into our end markets.