Patrick Industries, Inc.

Good morning, ladies and gentlemen, and welcome to Patrick Industries' second quarter 2024 earnings conference call. My name is Rob, and I'll be your operator for today's call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone should 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'Hara, Vice President of Investor Relations. Mr. O'Hara, you may now begin.

Good morning, everyone, and welcome to our call this morning. I'm joined on the call today by Andy Nemeth, CEO, Jeff Rodino, President, RV, and Andy Rader, 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. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Additional factors that could cause the results to differ materially from those described in the forward-looking statements can be found in the company's annual report on Form 10-K for the year ended December 31, 2023, and the company's other filings with the Securities and Exchange Commission. I would now like to turn the call over to Andy Nemeth.

Thank you, Steve. Good morning, everyone, and thank you for joining us on the call today. Our second quarter and first half performance continue to be a reflection of the incredible dedication and commitment of our team members in our Better Together culture. Our diversified business model, highly variable cost structure, strong balance sheet, and liquidity position in complement with our increasing focus on delivering the best customer service and innovative quality product solutions continue to put us in a position of strength as we navigate current market conditions. In both Q2 and the first half of 2024, we delivered increased revenue, operating and EBITDA margins, and earnings year over year despite persistent volatility in our end markets. Our second quarter revenues increased 10% to approximately $1.02 billion, and on a trailing 12-month basis, our consolidated revenues were approximately $3.6 billion. Net income in the second quarter improved 13% to $48 million, with earnings per diluted share of $2.16. Our adjusted EBITDA grew by 14% to $130 million, with adjusted EBITDA margin expanding 40 basis points to 12.8%. As we look to the back half of the year, based on our detailed analytics and recent commentary from leading OEMs in our end markets, we are now anticipating that strict inventory discipline will continue across our markets, both at the OEM and dealer levels, until more certainty is achieved as a result of the interest rate environment. Jeff and Andy will provide a more in-depth discussion on this later in the call. However, I want to highlight three key longer term themes that are foundational to Patrick as we enter the second half of the year. First, our business is more resilient and nimble with higher potential revenue margins and earnings power as a result of the strategic diversification investments and cost management efforts we have made in each of our markets. For instance, in the first half of the year, Stronger demand from the RV and housing markets helped offset lower revenue from our marine market. Furthermore, a recent expansion in the power sports market through the margin of creative sport tech acquisition is outperforming our initial expectations and has already yielded positive results. Today, our RV business represents 44% of our total revenue, which is down from approximately 74% just 10 years ago, despite the fact that RV revenue has grown at a 12% CAGR since 2014. In 2019, RV represented 55% of our total revenue. And despite RV wholesale shipments being almost 20% lower in the current TTM period, RV revenue has increased at a 5% CAGR since then. Second, we are intensely prioritizing near and long-term innovation through our recently launched Advanced Product Group. This initiative is enhancing our ability to bring value-added product solutions and services to our customers across our businesses. As an example, in our marine market, We recently began production and launched Gear Glass, a premium glass windshield solution debuting in the ski and wake market. With powerboat industry-wide potential, this further enhances our offering of a full suite of windshield solutions for our customers. With the incredible network of brands in our portfolio and in alignment with our Better Together initiatives to synergize our product power and solutions model, our business leaders now possess better visibility and ability to communicate, collaborate, and coordinate best practices with each other across our end markets. And third, acquisitions have been and will continue to be a key component of our strategic growth plan. Our pipeline remains robust, and we are consistently cultivating and evaluating deals, both large and small, with the intent of continuing to execute on the model that has helped us produce our slow and steady consistent margin improvement. The acquisitions we have completed over the past 15 years have accelerated our growth and enhanced our margin profile. expanded the breadth of our product offerings to deliver full solutions, introduced us to new customers, deepened existing relationships, and brought tremendous talent to our organization. Our resilient financial performance and prudent inventory management has enabled us to maintain a strong balance sheet. With no major debt maturities until 2027 and available liquidity of $519 million, we remain poised to allocate capital as advantageous opportunities present themselves. Our strong free cash flow generation has positioned us to reduce debt, invest in growth opportunities, all while returning cash to shareholders through dividends and opportunistic share repurchases. In anticipation of a cautious and disciplined third and fourth quarters and the expectation of improving tailwinds in fiscal 2025, our team will continue to aggressively control and leverage our highly variable cost structure without impacting the integrity of the business model. While supporting and servicing our customers at the highest level, and retaining our ability to nimbly react to positive changes in demand. I'll now turn the call over to Jeff, who will highlight the quarter and provide more detail on our end markets.