Patrick Industries, Inc.

Good morning, ladies and gentlemen, and welcome to Patrick Industries' third quarter 2024 earnings conference call. My name is Joe 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 should require operator assistance during the conference, please press star zero on your telephone keypad. And please note that this conference is being recorded. And now, I will turn the call over to Mr. Steve O'Hara, Vice President of Investor Relations. Mr. O'Hara, please go ahead.

Good morning, everyone, and welcome for our call this morning. I'm joined on the call today by Andy Nemeth, CEO, Jeff Rodino, President, RV, and Andy Rader, CFO. Kip Ellis, President, PowerSports Technology and Housing, is also here for Q&A. 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 results to differ materially in 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. Once again this quarter, I want to first and foremost thank our amazing team members for their incredible commitment, dedication, skillful execution, collaboration, and attentiveness to maintaining our high level of organizational performance during this prolonged period of industry-wide headwinds in each of our end markets. OEMs and dealers have maintained strict inventory and production discipline in response to the current demand environment. We as well have adapted our model in alignment. Our business, while not totally unaffected, continues to be more resilient on a relative basis. This is the direct result of several factors included in our strategic plan, including our ongoing diversification, strategic approach to M&A, and prudent cost management, which have all played key roles. Additionally, we've demonstrated our ability to right-size operations while simultaneously generating strong cash flows and delivering high quality solutions and services to our valued customers. Throughout this process, we've prioritized maintaining a strong balance sheet and access to ample liquidity, which together preserves our ability to remain nimble and flexible. In the third quarter, we produced top line growth of 6%, resulting in revenue of approximately $919 million. and on a trailing 12-month basis, approximately $3.7 billion. Net income in the third quarter grew 3% to $41 million, and earnings per diluted share were $1.80, including approximately $0.06 of dilution from our convertible notes and related warrants. Our adjusted EBITDA increased 7% to $121 million, while adjusted EBITDA margin was up 10 basis points to 13.2%. Last quarter, we discussed three key themes for our business. the diversification and resilience of our model, advanced product innovation, and M&A strategy. Before Jeff and Andy dive further into our end market and financial performance, I want to highlight some points of execution on these themes. First, we have focused on leveraging the strength and diversification of our portfolio, not only among our end markets, but also with our product offering. Our ability to offer a good, better, best value proposition allows us to adapt to changing consumer preferences, while maintaining our competitive edge. We have been able to maintain strong operational performance and resilient margins despite what continue to be challenging conditions across our end markets. As we move through the quarter and even into the past month or so, we recognize that consumers remain price conscious and interest rate sensitive. Our results this past quarter illustrate the success of the targeted investments we have made strategically and through our automation efforts to diversify our business and improve its scalability and quality over time. Second, advanced product solution innovation remains a core tenet of our growth strategy, and enterprise-wide investments are elevating the innovation platform that exists within Patrick to accelerate our longer-term growth through new products and services. Our dedicated advanced product group is leading the way at Patrick in partnership with our customers to develop next-generation solutions. We have invested in and formally cultivated teams of industry experts, engineers, and designers in our outdoor enthusiasts and markets that are focused on synergizing the leadership at Patrick in an effort to bring new products and services to our customers over the next several years. Through a combination of internal innovation, strategic acquisitions, and a tremendous focus on customer service, we will continue to strengthen our relationship with all of our customers. We view these investments as strategically important and highly accretive over the long term. In complement with our advanced product group, individual brands across Patrick continue to develop their own award-winning products and services. Seadeck was honored once again at IBEX this fall for their all-new magnetic Seadeck, which employs ultra-strong magnets to form a secure bond on surfaces while allowing easy removal for cleaning, winterization, and maintenance. CDAC continues to challenge the status quo by bringing functional, customizable, and creative products to market. Additionally, our new composite board, proprietarily named NTXT, is gaining significant penetration with our RV customers as they focus on more innovative, lighter weight, sustainable solutions. And third, as we discussed last quarter, acquisitions remain a key component of our strategic growth plan. To that end, in the quarter, we close on the acquisition of RecPro, which establishes an aftermarket platform and foundation for us, significantly increases our exposure to the aftermarket, and has tremendous synergies with our marine and power sports brands and products. Jeff will provide further insight on some of the key synergies and opportunities from this acquisition in a few minutes. On the capital structure side of our business, we ended the quarter with a strong balance sheet and augmented that strength with the completion of our refinancing earlier this month, opportunistically improving our liquidity position and our cost of debt while extending the maturity horizon on both our credit facility and our long-term debt. Our available liquidity at the end of the third quarter was approximately $458 million, and on a pro forma basis, after the aforementioned transactions, was approximately $755 million. We remain committed to a disciplined and balanced capital allocation strategy with a focus on growth and strategic acquisitions. As we head into the fourth quarter and year end, OEMs and dealers remain intensely focused and disciplined as they maintain minimal inventory levels, and we anticipate reduced production levels in the fourth quarter. We've aligned our business to the current run rate environment. However, we also want to remain flexible, nimble, and scalable to support the expected ramp up in our business when our markets turn and capitalize on that recovery. At this time, even though our OEM partners are further scaling back production and focusing on smaller units, We are prioritizing our ability to support our customers for the longer term by committing to investments in our team and business model during this period for that longer-term outlook, which will create some short-term inefficiency and operating margin erosion in the fourth quarter. Additionally, we may increase our inventory levels in the fourth quarter and first quarter of 2025 to ensure our ability to flex and scale with our customers' needs. We are optimistic that tailwinds are building related to interest rates and remain confident about the consumer's excitement to participate in the outdoor enthusiast space and the growing need for affordable housing. While recent interest rate reductions have yet to significantly impact consumer purchasing patterns and recent weather challenges have changed some of the priorities for their disposable income, our team believes demand will start to recover as we move through 2025 and we are confident in our ability to pivot and maximize our results and opportunities. And finally, I'm excited to announce that Patrick Industries will be hosting its inaugural Investor Day in New York on December 3rd. This event will provide an opportunity for us to share the latest update on our long-term strategic vision, a more detailed outlook for 2025, and showcase some of the incredible talent we have in our organization. We look forward to continuing to actively engage with the investment community and providing deeper insights into our business and growth strategies. I'll now turn the call over to Jeff, who will highlight the quarter and provide more detail on our end markets.