Q1 2023 Patrick Industries Inc. Earnings Call

April 27, 2023

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.

I will now turn the call over to Mr. Steve O'hara, Vice President of Investor Relations. Mr. O'hara, you may begin.

Good morning, everyone and welcome to our call. This morning, I am joined on the call today by Andy Nemeth, CEO Jeopardy, and our President Jay <unk>, CFO and Matt <unk>, Our senior Vice President Finance 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 2022 and in our other filings with the Securities and Exchange Commission. We undertake no obligation to update 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 begin our discussion this morning, I want to take a moment and express our sincere and unwavering appreciation for our team members continued dedication and commitment to drive Patrick forward through these dynamic times.

Their focus on our goal of providing exceptional quality and customer service is inspiring and energizing.

Through our better together culture. The brands that makeup Patrick continue to collaborate and drive best practices, while developing new and innovative product solutions in an effort to improve our performance and the value that we provide to our customers positioning us as a leading component solutions provider to the leisure lifestyle and housing markets.

Today, our portfolio is more balanced across our end markets as our first quarter results. Once again reflect the benefits of our focus on strategic growth and diversification.

We are realizing the returns on the investments we've made in this strategy, particularly in the marine market, which remain resilient through the first quarter.

Highlighting this is the fact that despite a 54% decline in RV wholesale shipments in the first quarter, our consolidated net sales declined 33%.

Our RV and marine revenue mix in the first quarter of 2023 was 41% and 31% of total revenues, respectively, compared to 61% and 16% respectively. In the first quarter of 2022.

Additionally for historical comparison purposes. This RV wholesale shipments Sally represents a 21% decline versus the first quarter of 2019 or the last first quarter before the pandemic.

Despite this decline in shipments we earned adjusted EBITDA of $97 million and net income of $30 million, which are 78% and 45% higher respectively than the same quarter in 2019, when our business was much more heavily weighted towards RV.

In short, although first quarter 2023, RV shipments were much lower than in the same period in 2019, our RV content per unit was 71% higher than our consolidated revenue was 48% higher.

We have a more profitable and resilient business model and stronger balance sheet with significant liquidity.

While we've made progress we continue to see significant opportunity to build an even stronger more diversified company, which we believe will benefit all of Patrick stakeholders.

Although our end markets continue to face headwinds from inflation rising interest rates and overall economic uncertainty the leisure lifestyle markets have traditionally been the first markets into and out of economic cycles demographics.

Demographics across our markets remained strong with younger buyers, having begun to enjoy the benefits of the leisure lifestyle.

Additionally, housing inventory in general remains low while demand for affordable housing remains solid. Therefore, we believe these conditions will be temporary with a healthy and promising overall long term trajectory.

Turning to the numbers, our first quarter revenues decreased 33% to $900 million and on a trailing 12 month basis. Our consolidated revenues were approximately $4 4 billion or.

Our net income in the first quarter decreased 73% to approximately $30 million and our net income per diluted share was $1 35.

Finally, I'd like to share my sincere and heartfelt appreciation and best wishes to Jake as he begins the next chapter of his career in May and moves back home to North Carolina.

We work tirelessly to implement and strengthen our processes software policies and procedures and significantly enhanced our overall financial foundation, well positioning us for the next stage of growth.

While we are disappointed to see him depart the team. He leaves in place is first rate and we will continue to work together toward our continuous improvement long after his departure.

As we begin the process of finding our next permanent CFO , we are confident both in mass abilities and expertise in the interim and that we will find the right individual who is ready to take on the opportunities and challenges that come as we begin the next phase of our growth.

I'll now turn the call over to Jeff, who will highlight the quarter and provide more detail on our end markets.

Thanks, Andy and good morning, everyone as mentioned the uncertain economic environment has impacted demand across all of our end markets with heavier emphasis on consumers more sensitive to rising interest rates.

We continue to diligently flex and manage our production schedules across our business in alignment with our customer needs and remain in constant contact with these partners and all of our markets.

Our RV market has experienced the most volatility as oem's utilize their tremendous scalability.

<unk> wholesale production with balanced dealer inventory levels.

RV wholesale unit shipments of 78600 decreased by 54% or more than 93000 units from the first quarter of 2022.

We currently estimate first quarter retail registrations of approximately 84000 units.

As we head into the selling season based on our touch points. We believe the dealers are utilizing incentives to work through a larger than optimal mix of 2022 model year units.

As they position themselves for the upcoming 2020 for model year change in the back half of the year.

The metrics, we have outlined and play a net decrease of approximately 5400 units to dealer inventory in the quarter.

Our estimates indicate the TTM dealer inventory weeks on hand at the end of the first quarter of 2023 have remained consistent with the levels beginning in the back half of.

Of 2022 at approximately 18% to 21 weeks.

This is below historical pre COVID-19 levels of approximately 26% to 30 weeks, implying a potential new normal inventory level based on trends for the last four quarters.

Our first quarter RV revenues decreased 55% from 821 million to 367 million and represented 41% of our consolidated total.

Our RV content per unit increased 22% on a TTM basis to $5349 per unit driven by market share gains pricing and acquisitions.

Same with leisure lifestyle, the marine side of our business has remained resilient through the first quarter of 2023 as dealers in general have reached or are reaching basic wholesale retail equal or equilibrium and inventory on hand.

We further believe dealer inventories are balanced as we approach the spring selling season and model year change in the second half.

We estimate marine wholesale unit shipments were up 14% in the quarter to approximately 52 to 57.

Units on retail unit shipments that were down approximately 20% to a range of 32 to 37000 units.

Pre pandemic production seasonality was generally spread between $50 to 55% of units produced in the first half of the year.

And 45% to 50% of the units produced in the back half of the year.

We expect similar cadence in fiscal 2023 as marine Oems continue to work with dealers to keep inventory levels and balanced with consumer demand.

Our marine revenues, which represents 31% of our first quarter 2023, consolidated sales increased 25% to $276 million driven by acquisition market share gains and pricing.

Our growing aftermarket portfolio as a complement to our marine OEM focused business, where we offer an expanding array of products aimed to customization upgrade and replacement.

In addition to higher margins in general generally lower cyclicality.

The aftermarket allows us to tap into a significant base of used boats that changed hands annually.

A market that is much larger than the new boat market on a unit basis.

Our estimated marine content.

Per wholesale unit has increased 27% on a TTM basis to $5266 per unit.

We estimate overall marine dealer inventories are at 20% to 23 weeks on hand, increasing from the fourth quarter levels and potentially approximating or approaching a new normal based on current economic conditions.

Pre pandemic average weeks on hand, approximated 35 to 40 weeks.

The housing side of our business is primarily tied to MH single family multifamily and big box.

With an approximate split of about 52% manufactured housing and 48% single family multifamily and big box.

MH estimated wholesale unit shipments were down 28% in the quarter.

Total residential housing starts for the first quarter decreased 18% of which single family starts declined 29% and multifamily starts increased 5%.

Revenues in our housing market decreased 14% to 257 million and represented 28% of consolidated sales are.

Our estimated MH content per unit increased 16% to $6353 on a TTM basis.

Although OEM shipped fewer units in the first quarter, we expect production will improve sequentially in the second quarter and we continue to believe the manufactured housing remains a viable cost effective alternative to site built housing and remains a highly relevant as consumers grapple with higher interest rates.

On the operations front, we continue to invest in automation and innovation, improving our efficiencies and boosting our ability to compete in any environment. We recognize the relevance of technology and are continually exploring how it can enhance our manufacturing processes and infrastructure.

We are keen to identify and implement cutting edge.

Technology with an eye towards improving our efficiencies and the satisfaction of our team members.

Our innovation team continues to engage directly with our end consumers of RV is to understand their needs and preferences better and ensure we focus on customer utility and satisfaction.

With our culture of embracing change and leading markets. We serve we remain confident that our investments in automation and innovation will position us for continued success in the years to come.

As an example of our efforts our innovation team visits Patrick variance to find those that would benefit from deployment of cobalt robotic systems and our facilities.

We have collaborated with multiple regional automation integrators to find ways within our organization to engage with robotic applications to improve safety output efficiency and labor utilization.

One of our major manufacturers of complex interior and exterior sub assemblies for the automotive RV and marine markets recognized an opportunity in their manual drilling sell.

The robotic drilling cell consists of two universal robots, the controlled precision high speed drill motors to complete the previous manual operation.

We believe there remains significant upside from their efforts like these and our team remains eager to implement solutions to improve efficiencies throughput and safety.

We will continue to focus on scalability and flexibility of our operations and alignment with our customer needs.

We are aligned on capital allocation strategy to reinvest in our business drive return on capital and return value to our shareholders.

Our acquisition strategy has brought us high quality brands premium products and strong team members, allowing our growth potentially outpace our individual end markets.

We are ready and prepared to pivot when market conditions change and leveraged the flexibility and resiliency of our business model and culture.

Finally, I would like to personally thank Jay for his tremendous contributions to our team over the past two and a half years.

It was great working with you and wish you the best in the next chapter of your career now for the last time I will turn the call over to Jay who will provide additional comments on our financial performance.

Thanks, Jeff and good morning, everybody.

Our consolidated first quarter, net sales decreased 33% or $442 million to $900 million.

Our end markets were all impacted at the retail level by the headwinds of a slowing economy and rising interest rates and inflation with RV Oems addressing softer demand through a significant reduction in production at.

As Jeff noted, while our RV revenue declined 55% our diversification strategy continued to resonate with our marine revenue, increasing by 25% and partially offsetting the declines in other markets our housing revenue declined 14%.

Gross margin declined 40 basis points to 21, 6% as the negative impact of the significant decline in RV and MH shipments was partially offset by the contributions of portfolio diversification recent acquisitions and the realization of production and labor efficiencies, coupled with our automation initiatives.

Warehouse and delivery expenses declined $5 million to $36 million in Q1, 2023, but increased 90 basis points as a percent of sales due to reverse absorption of overhead primarily in our distribution operations operating.

Operating expenses for the first quarter were 15, 3% of sales an increase of 530 basis points due primarily to a 9% increase in SG&A expenses and 17% increase in the amortization did acquisitions.

SG&A increased 360 basis points as a percentage of sales, reflecting our investments in human capital and recent acquisitions, which tend to generate higher gross margins, but also carry a higher SG&A mix.

Excluding a $5 $5 million pre tax gain on sale of property included in the SG&A in the first quarter of 2022, SG&A was essentially flat year over year.

Operating income decreased $106 million, leading to a 590 basis point decrease in operating margin primarily driven by the factors previously described.

We continue to invest in several key infrastructure initiatives that are expected to bolster our ability to drive automation and efficiencies, both operationally and administratively to provide excellence to our customers, while providing long term value to our shareholders. These initiatives include it.

Software and automation as we seek to leverage cutting edge technologies and enhanced analytical insight to streamline our operations and improve efficiency.

Also continued to invest in human capital initiatives and our culture as we remain committed to our people, whose talent training and expertise are pivotal to our success.

Net income decreased 73% to $30 million, which equates to $1 35 per diluted share adjusting for the impact of our 1% convertible notes, which matured and were fully repaid in February our adjusted net income per diluted share was $1 38.

Aside from full year 2023 results, which will include one month of the adjustment there will be no impact on our EPS related to these notes for the remainder of the year.

Our overall effective tax rate was 21% for the first quarter compared to 23, 3% in the prior year.

The first quarter rate was low due to the tax benefit of share based compensation. We continue to expect our overall effective tax rate for 2023 to be approximately 25% to 26%.

Looking at cash flows cash used in operations was approximately $1 million compared to cash used in operations of approximately $23 million in the prior year's quarter.

We continue to focus on the monetization of working capital.

<unk> net income alongside the seasonal timing of the collection of our receivables resulted in a use of cash.

Given the reduction in production, we've seen we remain focused on inventory levels and note our inventory is down 10% year over year to $628 million and 6% on a sequential basis as well, reducing the operating cash outflow versus the prior year period.

This quarter, we invested $20 million in purchases of property plant and equipment focused on automation, which will drive improved efficiencies.

In tandem with our highly variable cost structure, our investments have and will continue to allow us to seize opportunities intended to boost long term growth.

We now expect to spend $65 million to $70 million on capital expenditures in 2023.

We continue to evaluate opportunities to strategically deploy capital and continue to focus on well run quality businesses. The champion the entrepreneurial spirit with a focus on growth and diversification.

Our strong financial health allows us to actively explore attractive acquisition opportunities as a softer market may lend itself to more favorable valuation scenarios.

We repurchased approximately 54600 shares for a total of $4 million in the quarter and returned $11 million to shareholders in the form of quarterly dividends.

At the end of the first quarter, we had approximately $489 million of total net liquidity comprised of $31 million cash on hand, and unused capacity on our revolving credit facility of $458 million.

Our total net leverage ratio was two three times and.

In addition by design, we have no major debt maturities until 2027.

We've worked hard to build this robust liquidity profile and long term capital structure, which enables us to navigate through the uncertain macroeconomic environment with confidence our financial flexibility has allowed us to quickly adapt to meet the changing needs of our customers, while still being able to invest in our business effectively.

Our long term cash flow performance is a testament to our commitment to creating long term value for our shareholders and our ability to adapt to changing market conditions.

Moving to our end market outlook as noted on our fourth quarter call. We remain in a period of macroeconomic uncertainty.

Starting with RV Oems are continuing to work with dealers to keep channel inventory appropriate as the industry has returned to normal seasonality as coincide with a slowing economy and consumers impacted by higher interest rates and the effects of persistent inflation.

Although the year is off to a slower start for both wholesale shipments and retail registrations wholesale and retail remained close to parity, which means Oems have remained disciplined in their production a positive sign.

Based on recent trends, we currently estimate full year RV retail registrations will be down approximately 20%, 24%, implying approximately 335000 to 360000 units.

Assuming current dealer weeks on hand remain consistent as Jeff discussed this approximates based on our retail estimates.

Full year 2023, RV wholesale unit shipments of 310000 to 325000 units, implying a decline of approximately 35% to 38% from 2022.

Now marine market, we continue to estimate 2023 wholesale shipments will be down low double digits marine retail to be down high single digits to low double digits.

We believe dealer inventories are generally calibrated with retail with higher priced categories leaner on inventory.

On the housing side of the business, we expect MH wholesale shipments to be down 15% to 20% for 2023 retail sales absorbing available wholesale production on a real time basis.

And our residential housing end market, we expect 2023, new housing starts will be down low double digits.

To wrap up we've adjusted our end market outlook based on the most recent trends we are entering the selling season for our end markets and expect the 2023 retail trajectory to become clearer as we progress through the year and as consumers calibrate to the current financing environment.

We continue to estimate our operating margin will be between seven 5% and eight 5% for full year 2023 expect to generate operating cash flow at or in excess of $400 million. This year as working capital lines with revenues, which implies free cash flow of over $320 million based on our Capex estimates.

Each of these expectations is the resilience of our marine business relative to our RV business in the current RV slowdown.

Before we start the Q&A I'd like to share my thanks to Andy Jeff and the entire Patrick family.

My tenure has been shorter than I expected I enjoyed working with the people of Patrick and as brands.

I'm excited to begin the next chapter of my career I am confident that the work we've done together will continue through the very strong and talented team that we have collectively put in place.

At Filer as noted will be assuming the role of interim CFO . Upon my departure later in May I'm highly confident madsen, our team's abilities and we'll be working with empathy facilitate a smooth transition.

That completes my remarks, we're now ready for questions.

Thank you ladies and gentlemen, the floor is now open for questions. If you do have a question. Please press star one on your telephone keypad at this time and are using a speaker phone. We asked that while posing a question you can pick up your handset to provide favorable film quality once again, ladies and gentlemen.

If you do have a question or comment please press star one on your telephone keypad at this time, please hold as we poll for questions.

And we will take our first question from Daniel Moore from CJS Securities. Please go ahead Daniel.

Thank you and good morning start very briefly just what by Sanjay. Thank you very much for all the help and best of luck on to bigger and brighter I'm sure.

We will do extremely well I appreciate the help.

Let me start with a question on.

Content per unit continues to see really healthy growth across the board, maybe just walk through the segments in high level terms, starting with RV and breakdown.

Growth between acquisition pricing organic volume gains and what your expectations for growth look like going forward. Thanks.

Hey, Dan. Thanks, It's Jay can appreciate the kind words at the outset there.

Maybe.

Absolutely agree we've seen great growth in our content per unit as you know we've been acquisitive across generally speaking our end markets specifically in leisure lifestyle with RV and marine a lot of that capital allocation for strategic purposes, directed towards our marine business and has really shown with that sequential and year over year growth, we experienced in our content per unit as well as us.

Overall revenues for marine and as we've spoken about last year.

Creating a $1 billion top line market business, which we're very proud of but maybe to take it back a half step and talk about the overall components of the.

Change in our revenue on a quarter over quarter basis, which we indicated down over 35%.

When you think about the buckets that that falls into.

And we usually start with the industry growth, which is the most significant piece of it than most.

Cases, whether on the way up or on the way down.

Highly publicized change and.

Wholesale shipments for RV lead the way there, but aggregate across our end markets will be a bright spot for marine but on a net basis down 40% related to industry growth so to speak or decline in this case.

Organic still continue to see and it resonates through our.

Okay per unit as you know Thats something were very focused on and we've been pretty consistent in our expectation of 3% to 5% growth exceeded that on a number of occasions over the past couple of years.

And some of that related to our foresight to rebuild our inventory ahead of.

Increased supply chain issues and maintaining strong liquidity.

Working closely with our banking partners to make sure. We're in a position that we can invest in our working capital and be able to provide those products for our customers and that really paid off and gave us only 3% this quarter, but all on share gain that we've taken away from folks when we have the ability to satisfy our customers' needs and continue to do.

To grow with them, even though they were to come down markets across the end markets acquisition growth a little bit lighter than we've seen over time as you know we've been it's been a little quiet here, you still have Rockford, Diamondback and others rolling in but thats, 4% of the growth.

So bringing that background, it's 40% or industry down up three.

<unk> on organic up 4% on acquisition.

That just around 33% down.

Our business on a quarter over quarter basis.

Yeah, when I think about content per unit and as Youre aware, we don't typically break down the components of that content per unit on a market basis and like to stay at the higher level.

Certainly as Ive mentioned in his comments here.

Our RV is a lot about share gain.

Acquisition of Alpha systems, well over a year ago has been probably the most meaningful acquisition bump to that content per unit, but really it's about taking share and then doing our best to maintain our pricing gains that we've experienced partially through the underlying commodities, which we feel have stabilized.

But partially through better innovation higher and better use better products higher mission critical offerings to our customers on.

On the marine side, certainly a lot of acquisition activity. There I think over $1 billion in a couple of years of revenue contributed through acquisitions, we've made spanning back at 2019 2020 timeframe.

And that's the principle that plus some pricing that's kept up and down a little bit ahead of some of the commodity inputs overtime have contributed to our growth areas in CPU, but thats primarily related to the acquisition growth of revenue and a greater share of the overall industry as we continue to move forward and rebalanced across our.

Portfolio of end markets, and specifically weighted towards leisure lifestyle of the marine business for that growth.

On the housing side of the business not a lot of acquisitions here lately, a few little tuck under is here and there and not really from a materiality perspective worth mentioning.

A lot of activity, there and finding better products.

A lot of innovation in our end markets, whether in the RV or the housing or the marine side, and staying ahead, and having better with our solar or other technological products have given us a lot of a lot of share gains there as well as our ability to build up that inventory and gain share and then now maintain that share has really contributed to the growth we've seen across the housing CPU related.

MH.

That's great color.

A couple of birds with one stone, which is very helpful.

Just talk about how April is shaping up in terms of OEM production levels relative to March.

Your expectations for the remainder of Q2 I appreciate the updated color in terms of the full year forecast just kind of <unk>.

Q2 shapes into that thank you.

Dan This is Jeff.

As we.

Through March into April production levels stayed relatively.

Flat.

We're still seeing those shutdowns.

As far as three day, four day work week Workweeks and.

And occasional week off here or there for an OEM.

But overall, we see that kind of continuing now through the end of.

The second quarter as dealers are really trying to right size their 2022 inventory.

Get that through the system and really prepare for 2020 for model years. So I think we'll see some continued shutdowns in pockets.

As they try to keep those inventories in line.

Perfect and last for me I'll jump out, but just in terms of margins.

Silicon 758, and a half for the year, maybe just talk about gross margins held up pretty nicely in Q1, despite the RV shipment declines your outlook for Q2 for gross margins and operating income operating margins.

Kind of relative to those Q1 levels. Thanks again.

Hey, Dan its Jay again. So appreciate the question, we still feel like we have a lot of resiliency at that gross margin line and despite some pretty meaningful reduction in our in our principal end market or at least where we have the greatest concentration in RV as we change that mix, which is just a little bit of that balloon squeezing we've talked about before.

<unk> calls.

The gross margin profile of our marine side of the business, which is typically one of our greatest gross margin contributors.

Kind of picking up where we're losing a little bit on the RV side. There is some absorption and just lower levels of production against a relatively modest fixed cost base fixed stock based nonetheless.

Gross margin some of the things to think about it.

We are holding in pretty well 45, I think 40 basis points down on a quarter over quarter basis, and what's really helping contribute to that is our ability to hold at the cost of materials line and rebalancing that inventory that we've been talking about and ensuring that we are kind of partnered up with our customers on these stabilized commodities in our product pricing.

A little bit the labor side is where we executed a lot of cost savings type activities and rebalancing our labor force for the production.

Encounter and expect to encounter over the near to intermediate term.

So it was a really hard slog to build up the labor force, even though we were able to mitigate some of those pressures with the automation. We've spent money on over the past couple of years with our larger capex budgets that we've spoken about.

But still want to hang onto some of that labor and make sure that we as we see some of the fits and starts and new model year starts up make sure. We're in a good spot to continue to build and.

And meet our customers' needs so that a little bit of that decline that we saw is more related to some absorption on overhead and a little bit from a little bit harder on labor than we might otherwise do if we were right side of the business on a on a perfect apples to apples basis.

Operating margin is SG&A as we talked about in the past week.

Made a lot of investments in SG&A over the past two years.

So trimmed a lot of cost from SG&A over the past two years and it's kind of I would tell you about 25 million down on an annualized basis $25 million up on an annualized basis, but creating a better and stronger infrastructure with higher leverage level on a go forward basis, but thats whats <unk>.

Trend down at the top line Thats, what youre seeing that pressure that margin differential between that resiliency in the gross margin side, we're giving up a little bit at the operating margin side, but again thats all planned and we are very deliberate in those investments and ensuring we felt the cost structure and the infrastructure to support this business as we trend back up once we get through this period of macroeconomic uncertainty.

The next couple of quarters, I think is going to be the same or very similar story to what you saw in first quarter first.

First quarter from a production perspective, particularly in RV came out a little slower than we anticipated.

Temporary shutdowns and extended somewhat into January and for some brands even into February .

Folks are back up and running working for the 'twenty threes as Jeff mentioned.

At some point to them a lot as well.

But ultimately we're thinking about what those production schedules look like in accordance with his guidance just a few moments ago and what that means to our business and I would tell you. It feels feels grill real tight to first quarter and what our expectations are for production in those margins, but still working towards that target as we mentioned here in the prepared remarks.

Operating margin of seven five to eight and a half of the year.

Extremely helpful. Thanks, again hope to see in New York next week and best of luck.

Sure. Thanks, Dan.

Thank you and we will take our next question from Scott timber from Roth. Please go ahead Scott.

Good morning, guys. Thanks for taking my questions and I Echo Dan's.

Our comments, Jason was great working with you and I wish you all the best of luck in your new opportunity.

Thanks, Scott I appreciate that.

I'm, just trying to drill down to 22.

Excess inventory there really is still out there theres some commentary out there about dealers starting to face curtailments in may.

In June so I was just wondering through your touch points through your logistics company. What are you guys hearing.

From the dealers.

Yes, it varies really it varies among Oems and dealers alike as far as what type of inventory they have with regards to 2020 twos.

We've heard varying.

Discussions from 10% to 20%.

Upwards of maybe even around 30% so.

Really it's something that is dependent on the on the product line and really the dealers. So I know, they're working very hard with the with the Oems to diligently get through that product.

I think it slowed down the 2023 production a little bit to make sure that they're not bringing anything out on the on the lots new so they can really focus on that 22 products. So they can really get that really in alignment to where they feel like they need to be going into the 2020 for model year Thats coming up in July .

Got it and then on the organic side, obviously being within that 3% to 5% range in this environment.

Impressive, but just trying to get a sense of.

How much of it is.

Coming from your some of your customers inability to work through the supply chain crisis and how much of it is just through innovation and stuff like that.

Scott This is Andy I think one of the things that we're really excited about especially in an environment. Like this is that we've been able to really work between our brands to bring solutions to our customers and grow our business organically. So there is there is some price that's rolling in through the TTM numbers as it relates to our con.

But the new business that we've been able to not only bring on to date.

Because of the innovations that we've been bringing the product solutions opportunities that we've been bringing have been have been fabulous and then as we look forward. There is still significant opportunity out there to be able to go after organic share with our customers and.

As we've kind of.

Pivoted, a little bit here as it relates to kind of our acquisitions and kind of working through the market here and being very very balanced and disciplined we've certainly focused inward to be able to see.

And focus on all the opportunities that we think we have to bring more and more value for our customers. So it's been a great transition to that and I think it's reflected in our organic numbers, which we expect to continue.

Alright, and then last question on the margins.

Seven five to eight and a half, but maintaining that for the full year.

Is there any step down function that we should worry about in the next quarter or two I'm just trying to figure out.

The ramp up towards that number for the rest of the year.

Scott This is Andy I think as we look into Q2 and Q3 and we're looking at a kind of a full year estimate of seven five to eight 5%. We would expect to see op margin lift in Q2, and Q3, and then kind of resuming back to some normalization of Q1 ish in Q4. So as we think about just the next couple of quarters with a lot of things.

He's coming in line as it relates to commodities that we've seen stabilize.

Our ability to execute on the automation initiatives that we've done that's where we would expect to see the rise would be in Q2, and Q3, and then coming back to more normalized I don't call. It normalized but typical seasonality Q Q1 Q4 margin levels.

Got it.

That's all I have thanks again guys.

Thanks Scott.

Thank you and we will take our next question from Zack Satkin from Keybanc. Please go ahead.

Hi, Thanks, Thanks for taking my questions.

You might have touched on this a little bit as it relates to 2020 twos and I know you touched on the shipment side.

But in terms of rvs.

What are you hearing or seeing in April in terms of retail and <unk>.

And any color on how March kind of shook out would be helpful.

As it relates to kind of the lowered industry outlook there.

And then.

Second if you could provide any color on inventory cadence.

As well as targeted operating cash flow for the year that'd be helpful. Thank you.

Yes. So I'll start this is Jeff on the on the retail side and our touch points again, it is varying I would say from dealer to dealer and throughout the country.

We're hearing that traffic.

<unk> is pretty positive.

Weekly it can change, but relatively speaking positive.

As far as people out looking for per units on the lots.

But it does vary out there and we're being very mindful of it and really keeping a good eye on the retail to see where that shakes out I think that really is reflected in kind of the.

And we will take our next question from Noah is that Satkin from Keybanc. Please go ahead.

The production levels that we're seeing from the Oems and the fact that it's really kind of flattened out between April March and April . So we will continue to keep a pretty close eye on the retail and see where that that brings us moving forward.

This is Andy I think when you think about the 'twenty twos as we look at it I think the Oes are.

Really really utilizing their tremendous scalability to manage that inventory that's out in the field and as we look at Q2, we would expect to see the <unk> continue to be very disciplined in their production to make sure that they're very well positioned for the 24 model season.

July 4th shutdown. So that's how we're thinking about it I think Q2 is that that calibration point that the oes are utilizing again very very aggressively as they think about their scalability. We're so good at it thats, how we think about them managing the inventory mix of 'twenty twos Thats out there so.

I think as everybody is looking forward to kind of that July .

New model season for the 20 fours.

Okay, No. It's Jake let me step in on the inventory cash flow question that you had so yes, we spoke a lot about the inventory deliberate build over time and then we hit a inflection point last year, where we're thinking about where the normalization of the production levels are particularly in the RV and as you know our expectations.

Are they down the Chevrolet another bit of a step function down in our range of expectation for RV wholesale shipments for this year because of inventory as you can see from December 31, and now we've taken over $40 million out of our inventory between whats showing up on the balance sheet and what we have in a category of prepaid inventory so working hard on the monetization.

A lot of it takes a form of slowing our purchases and in some cases, eliminating purchases as we feel pretty good about the raw materials. We have what we have on the racks in our distribution businesses, which is about 23% of our business.

And put us in a position where we can just continue to monetize through.

Through those products as you look at our balance sheet. When it comes out Youll note that as we traditionally are weighted towards raw materials, which are true raw materials, which puts us in a great spot to flex the raw materials across our various business units of our various end markets. It's a lot of commonality there. It gives us some great outlets, while we still see some kind of a level wholesale shipments and <unk>.

Consistent demand in the marine side that may make up or where we've seen this drop off on the RV side.

<unk> side as well when I think about the cadence of how that inventory looks as I mentioned were down $40 million and I think this is typically a quarter, where we're building working capital and you can see on our consolidated cash flow statement that our cash burn so to speak is much lower than it was a year ago same quarter, when we expect to accelerate that inventory in.

Balance sheet monetization through the year and I expect to see it really weighted towards that cash generation from inventory to happen in kind of second half of third quarter third and fourth quarter, Noah and then as I mentioned in our prepared remarks, we expect that to lead to a kind of a baseline of $400 million of cash flow from operations. So on an expectation of.

Category of prepaid inventory, so working hard on the monetization a lot. It takes the form of slowing our purchases and in some cases, eliminating purchases as we feel pretty good about the raw materials. We have what we have on the racks in our distribution businesses, which is about 23% of our business.

<unk> significantly reduced production and impact on the top line on a year over year basis, we expect to be pretty level to up one on cash flow from operations and when you cut into that for the our cash flow rather than by capex expectations of $65 million to $70 million.

And put us in a position where we can just continue to monetize.

Through those products as you look at our balance sheet. When it comes out you'll note that as we traditionally are weighted towards raw materials, which are true raw materials, which puts us in a great spot to flex up raw materials across our various business units to serve our various end markets a lot of commonality. There. It gives us some great outlets, while we still see some kind of a level wholesale shipments and.

This is a great spot from a free cash flow perspective, the continued to either address the balance sheet invest in the business.

Even beyond that Capex target the acquisitions that Andy mentioned, we're always always being thoughtful about and where there might be great opportunities to add to the business, while returning capital to shareholders. So we expect to be in a pretty good spot to continue to execute on our capital allocation strategy through 2023 as well beyond.

Persistent demand in the marine side that may make up or where we've seen this drop off on the RV side than the housing side as well when I think about the cadence of how that inventory looks as I mentioned were down $40 million and I think that this is typically a quarter, where we're building working capital and you can see that our consolidated cash flow statement that our cash burn so to.

Thank you very helpful.

Yeah.

Thank you and we will take our next question from Craig Kennison from Baird. Please go ahead Craig.

Speak as much lower than it was a year ago same quarter, when we expect to accelerate that inventory and balance sheet monetization through the year and I would expect to see it really weighted towards that cash generation from inventory to happen in the second half of third quarter third fourth quarter, Noah and then as I mentioned in our prepared remarks, we expect that to lead to kind of.

Hey, good morning. Thank you for taking my question and Jacobs has been a pleasure working with you as well.

I wanted to ask about the M&A pipeline I guess, maybe just shed anymore light you can.

Your M&A pipeline and then as a.

Broader question.

A baseline of $400 million of cash flow from operations. So on an expectation of significantly reduced production and impact on the top line on a year over year basis, we expect to be pretty level to up one on cash flow from operations and when you cut into that for the our cash flow rather than by Capex expectations of 65 to 70 million.

With all of your focus on automation do you think Patrick as a whole as an entity.

Brings more to the table as a buyer.

Some of the opportunities whereby you can drive more synergies than maybe you could before before you had some of these.

I think manufacturing and automation expertise.

So puts us in a great spot from a free cash flow perspective, the continued to either address the balance sheet invest in the business.

Expertise.

Hey, guys.

Craig This is Andy I'll take this on the M&A front, we are continually cultivating our M&A pipeline.

Beyond that Capex target the acquisitions that Andy mentioned, we're always always being thoughtful about and where there might be great opportunities to add to the business, while returning capital to shareholders. So we expect to be in a pretty good spot to continue to execute on our capital allocation strategy through 2023 as well beyond.

As it relates to kind of deal flow coming from external sources.

Say that that slowed down certainly with the uncertainty in the market, but we constantly are out.

Making sure that our pipeline has has opportunity and potential in it and I think as we look at it today, we're being very disciplined.

Thank you very helpful.

Yeah.

Thank you and we will take our next question from Craig Kennison from Baird. Please go ahead Craig.

Got a full pipeline is as usual and plenty of opportunity to execute on I think as we look at the markets. We want to make sure that we're being disciplined and opportunistic in our acquisitions as well as our deployment of capital as Jake mentioned, so we feel we feel like we're in a good spot to be able to execute on opportunistic acquisitions that come due.

Hey, good morning. Thank you for taking my question and Jake it's been a pleasure working with you as well.

I wanted to ask.

About the M&A pipeline I guess, maybe just shed any more light you can on your M&A pipeline and then as a broader question.

As well as the other the other forms of capital deployment to drive the best value in the most returns in this marketplace. So we feel good overall, we're staying disciplined and theres plenty of opportunity and we're going to continue to focus on the return model I think as you look at where Patrick sat today my answer to that would be without <unk>.

With all of your focus on automation do you think Patrick as a whole as an entity.

Brings more to the table as a buyer.

Some of the opportunities whereby you can drive more synergies than maybe you could before before you had some of these I.

I think manufacturing and automation expertise.

<unk> do we bring.

More value as a buyer on the M&A front certainly there are tremendous synergies that I think we can we can work with potential candidates onto to drive value.

Expertise.

Hey, guys.

Craig This is Andy I'll take this on the M&A front, we are continually cultivating our M&A pipeline.

As it relates to kind of deal flow coming from external sources.

We're doing that today, we're working amongst our brands internally.

Say that that slowed down certainly with the uncertainty in the market, but we constantly are out.

To see where we can harmonize and bring solutions to our customers without jeopardizing the independence and individuality of the brands, which have made them. So special so it's I feel like we're in a really good spot overall and the investments that we made.

Making sure that our pipeline has has opportunity and potential and I think as we look at it today, we're being very disciplined.

In our infrastructure in our automation in our it and that we're making today.

I believe our positioning us very well for when the market does pivot. We believe we'll be able to take advantage of that and leverage off those those investments. So overall, yes. The answer is I believe we have a we have a.

We continue to drive a solid value proposition as a buyer, but also as Patrick overall.

That's great. Thank you so much.

And once again Thats Star one if you do have a question and next we'll go to Rafi <unk> from Bank of America. Please go ahead Rafi.

Hi.

<unk> do we bring.

Good morning, Thanks for taking my question and Jay quick best of luck.

More value as a buyer on the M&A front certainly there are tremendous synergies you know that I think we can we can work with potential candidates on to drive value.

Going forward.

I wanted to just ask kind of a bigger picture question about what you're sort of hearing about financial potential financial stress related to tighter.

We're doing that today, we're working amongst our brands internally.

Credit across the value chain.

Bolt on potential opportunities created in terms of.

Challenges from your competitors and then what Youre hearing about.

On the dealer side and some of the therapies that are having any issues.

Greg This is Andy I think just in general overall, we're not seeing or hearing tremendous pressure on the financing side as it relates to the retail environment today retail financing is available certainly rates are are higher.

In our infrastructure in our automation in our it and that we're making today.

Lending is available and we're not hearing that as a constraint really across our platform. We believe it is really just a matter of kind of the new normal and consumers getting used to the new normal as we kind of go forward, we look at kind of where the rate environment could land.

We continue to drive a solid value proposition as a buyer, but also as Patrick overall.

That's great. Thank you so much.

And once again Thats star one if you do have a question.

So I think that's what we're seeing out there today as it relates to that sort of pressure from an internal perspective, I think we're in a really really good spot Jack has done a fabulous job.

And next we'll go to Rafi <unk> from Bank of America. Please go ahead Rafi.

Hi.

Great.

Really positioning our balance sheet and positioning our financing structure to be able to be very opportunistic.

Good morning, Thanks for taking my question and best of luck.

Going forward.

I wanted to just ask kind of a bigger picture question about what you're sort of hearing about financial potential financial stress related to tighter credit across the value chain.

As it relates to opportunities that are there, but as well from a liquidity perspective, we're in a really good spot. So overall.

Think that we feel like we've got an advantageous position.

Both.

With where we sit today and there could be some financial stress out there you know in the markets, but the.

Opportunities you can create in terms of challenges.

Challenges from your competitors and then what you are hearing about anything on the on the dealer side.

The markets that we plan are very resilient as it relates to our competitors and our customers that we've been through these cycles before and I think that as we look at it we're going to remain opportunistic.

Any issues.

And we will take advantage of opportunities that come our way, but overall again, we're not seeing the overall financing environment created a tremendous amount of pressure today.

Okay.

<unk> lending is available and we're not hearing that as a constraint really across our platform. We believe it is really just a matter of kind of the new normal and consumers getting used to the new normal as we kind of go forward. When we look at kind of where the rate environment could land.

Super Helpful and then just.

You mentioned in the prepared remarks.

Talk a little about the aftermarket.

<unk> opportunity in Marine could you just skewed.

Sounds good thank you very interesting.

Compelling channel for growth can you just give a little bit more color.

So I think that's what we're seeing out there today as it relates to that sort of pressure from an internal perspective, I think we're in a really really good spot Jay has done a fabulous job.

Maybe like sizing the opportunity.

The margins in that segment.

Really positioning our balance sheet positioning our financing structure to be able to be very opportunistic.

What your initiatives are there.

Hey, Ralph it's Jake and I appreciate that question and it's something we're very focused on as we think about these couple of years now of running record production levels across our end markets and ensuring that while we have great connectivity almost of the umbilical level with our OEM customers, there's a lot of vehicles out.

As it relates to opportunities that are there, but as well from a liquidity perspective, we're in a really good spot. So overall.

That we feel like we've got an advantageous position.

With where we sit today and there could be some financial stress out there you know in the markets, but the market. The markets that we plan are very resilient you know as it relates to our competitors.

They're in houses out there in the RV Park, the boat Park or the manufactured housing Park I guess for lack of a better description that we want to make sure that we have we have great connectivity to enable to service them as well as all the benefits of the aftermarket can bring.

And our customers that we've been through these cycles before and I think that as we look at it we're going to remain opportunistic.

And we will take advantage of opportunities that come our way, but overall again, we're not seeing the overall financing environment created a tremendous amount of pressure today.

To help with the cyclical pressures and otherwise.

When we think about our.

Actual aftermarket exposure as we've spoken about in the past, we've always pegged at around $200 million plus or minus of annualized run rate revenue and I would say, it's a little bit inside that on a run rate basis. Today. If you think about the global aftermarket kind of complex over the past few years it had a lot of momentum.

Okay.

Super Helpful and then just.

You mentioned in the prepared remarks.

Talk a little about the aftermarket opportunity in.

<unk> could you just give bob.

It sounds like you're very interesting.

Compelling channel for growth can you just give a little bit more color.

Weather for us or our end markets auto or otherwise through 2022 into the summer 2022, while the.

Maybe like sizing the opportunity.

The margins in that segment.

Speculation that was fueled by stimulus spending folks were working from home. They have time to do their own kind of shaking tree mechanic type work installers were busy doing other things that they do and we invested at that time as well and some of our more significant aftermarket investments since that time were seadog westbound and Rockford Farscape, who are meaningful participants through that.

It looks like what your initiatives are there.

Aftermarket channel.

Aftermarket again categorically kind of cooled off a little bit through 2020 tuned to down I would say its normalized and it has normalized and that just a little bit for us in that run rate under $200 million level.

<unk> out there and houses out there in the RV Park, both park or the manufactured housing Park I guess for lack of a better description that we want to make sure that we have we have great connectivity to enable to service them as well as all the benefits of the aftermarket can bring to help with the cyclical pressures and otherwise.

But we see a lot of opportunity there and as Andy mentioned, when we think strategically about the business and where to take it and look for deeper penetration across our end markets into that installed base of product. So that's pretty exciting to us.

About how to how to quantify that market.

When we think about our.

It's hard to do if you were to say the addressable market, but there is a million boats out there and we had a year of 600000 rvs out there, which implies a whole lot of folks.

And the year before that in the years that will follow that that we cannot that we can touch through aftermarket so hard to quantify what it is but we have a tremendous we have so much run right in front of us in that space.

Weather for us or our end markets auto or otherwise through 2022 into the summer 2022, a lot of speculation that was fueled by stimulus spending folks were working from home, they're timed to do their own kind of shade tree mechanic type work installers were busy doing other things that they do and we invested at that time as well and some of our more significant aftermarket invest.

A long time before we bump up against the ceiling and we're looking for those opportunities actively.

Asked about margins the margins are typically depending on the product of course soft goods, if youre trafficking and T shirts, and <unk> and things like that it's going to be a little bit lower commoditize products, but for the other things that we're looking to get into value added products like our Rockford offerings are wet sound's offerings seadog turbo swing fish master so on and so forth those typically bring better margin.

<unk> since that time were seadog wet sounds and Rockford, Farscape, who are meaningful participants through that aftermarket channel.

<unk>, what you see from an OEM perspective, as it's in many cases direct to consumer one step distribution of the consumer so it's very additive to us not only on a running basis for mix margin contribution, but also as we think about that.

Aftermarket again categorically kind of cooled off a little bit through 2022, and the down I would say its normalized normalized and that just a little bit for us at that run rate under $200 million level, but we see a lot of opportunity there and as Andy mentioned, when we think strategically about the business and where to take it look for deeper penetration across our end markets into that installed base of product Thats pretty.

The typical R&R type spend that you see whether in housing or across our end markets.

If someone has a boat that they don't want to sell but they want to bring it up the code we want them to go buy some Rockford a wet sound speakers to put it in there and really put up put a new tower on it really it really add to there.

Exciting to us when you think about how to how to quantify that market.

It's hard to do if you were to say the addressable market, but there is a million boats out there and we had a year of 600000 rvs out there, which implies a whole lot of folks.

But look at that.

That unit so.

That's how we think about it.

Are we going to stop short of.

Disclosing the absolute margin profile, but know that there is a lot of benefits aftermarket brings us we're very focused on it we like what we've seen so far with these investments.

From the years before that in the years that will follow that.

Now that we can touch through aftermarket so hard to quantify what it what it is but we have a covenant we have so much run right in front of us in that space.

Thank you guys.

Really helpful and then just one more.

A long time before we bump up against the ceiling and we're looking for those opportunities actively you asked about margins. The margins are typically depending on the product of course soft goods, if youre trafficking and T shirts, and beer cruises and things like that it's going to be a little bit lower monetize products, but for the other things that we're looking to get into value added products like our Rockford offerings are wet sounds offerings.

I want to follow up your comments on pump.

How you are managing.

What <unk> level.

Obviously, we just went through a period, where it was difficult to find labor.

And now with the manufacturing with elements of the body.

Pull back a lot.

But the overall job market is generally pretty healthy.

Seadog Turbo swing fish master, so on and so forth those typically bring better margin profile than what you see from an OEM perspective as it is in many cases direct to consumer one step distribution of the consumer so it's very additive to us not only on a running basis from its margin contribution, but also as we think about that.

How do you think about <unk>.

Managing the labor force and not having too much turnover.

During this sort of downtime or cyclical downturn.

Relative to <unk>.

Fuel recovery.

The typical R&R type spend that you see whether it's housing or across our end markets.

Any perspective, there would be helpful.

When someone has a boat that they don't want to sell but they want to bring it up to code. We want them to go buy some Rockford, a wet sounds speakers and put it in there and really put out a new tower on it really it really add to there.

Greg This is Andy I think as we look at the talent that we've got in the organization, we feel really good about.

Core talent levels and the engagement.

But look of that.

In our culture.

That that unit so.

Our team is very much aligned we've got great players and some hard Chargers that are fun to work with and be a part of so our culture is about engagement and talent development and opportunities and so just from the kind of the overhead side of the business. We feel good about the foundation.

That's how we think about it.

Going to stop short of.

Disclosing the absolute margin profile, but know that there is a lot of benefits aftermarket brings us and we're very focused on it we like what we've seen so far with these investments.

Thank you that's really helpful. And then just one more.

I want to follow up your comments on pumps.

Is there and then on the variable side of the business as you mentioned.

How are you managing the wafer level.

Obviously, we just went through a period, where it was difficult to find labor.

Our team is well has done a really good job of managing the labor workforce today, we're not seeing.

And now with the manufacturing elements of everybody's like pull.

Tremendous labor issues out there.

We are doing a great job of flexing, our labor to make sure we're matching up with customer demand and again I think as we focus and continue to focus on engagement and talent planning and opportunities in front of team members. We just think there is an incredible runway.

Pulled back a lot.

But the overall job market is generally pretty healthy how do you think about.

Managing the labor force and not having too much turnover.

During this sort of downtime or cyclical downturn.

And that supports the talent that we've got here. So we feel we feel overall good about where we sit from a labor position. Our team has done a great job of flexing its not something that we're seeing a tremendous amount of pressure on today, but we remain focused on engagement with our team members.

Relative to <unk>.

Natural recovery.

Any perspective, there would be helpful.

Brian This is Andy I think as we look at the talent that we've got in the organization, we feel really good about.

Thank you that's helpful.

Our core talent levels and the engagement.

Thank you and we'll take our next question from Griffin, Brian from D. A Davidson. Please go ahead.

In our culture.

Our team is very much aligned we've got great players and some hard chargers that.

Yeah. Thanks, Ken So just one for me.

We've had some pretty negative news from marine dealers and Oems This morning.

Fun to work with and be a part of so our culture is about engagement and talent development and opportunities and so just from the kind of the overhead side of the business. We feel good about the foundation Thats there and then on the variable side of the business. As you mentioned you know our team as well as <unk>.

Can you just kind of talk about what categories are currently holding up the best.

And maybe which ones are lagging as we head into May and then I guess, just your overall sense of where retail is currently yes.

Thanks.

Sure This is Andy.

As we look at kind of our mix across the spectrum, we sell to all.

Done a really good job of managing the labor workforce today, we're not seeing.

Tremendous labor issues out there we are doing a great job of flexing, our labor to make sure we're matching up with customer demand and again I think as we focus and continue to focus on engagement and talent planning and opportunities in front of team members. We just think there is an incredible runway.

All components of the retail environment as it relates to marine and.

We've got heavier concentration of what I'd say fiberglass saltwater ski and wake.

Then we do mix of let's just call it aluminum and pontoon and so we.

We still see the we still see strength in the fiberglass market saltwater market.

And as well even in the freshwater market, we're seeing resilience there today too. So our mix is geared towards the I would say it a little bit of the higher end boats.

Which remains strong and solid to date, we've not seen tremendous fall off on retail we do think that there will be some softening as we talk about in our estimates and in our expectations for full year market, which we built into our model, but overall I think theres balance in the mix that's out there today as we've mentioned as it relates to dealer inventories dealer inventories are lower than they've been historically.

Thank you that's helpful.

Thank you and we'll take our next question from Griffin, Brian from D. A Davidson. Please go ahead.

Yes, Thanks, guys. So just one for me.

We've had some pretty negative news from marine dealers and Oems This morning.

Can you just kind of talk about what categories are currently holding up the best.

Correctly, and we're not expecting retail to fall off a cliff.

And maybe which ones are lagging as we head into May and then I guess, just your overall sense of where retail is currently yes.

And feel pretty good about where we sit today.

Sure This is Andy.

We as we look at kind of our mix across the spectrum, we sell to all.

Once again Thats Star one if you do have a question or comment.

All components of the retail environment as it relates to marine and.

Okay.

Yes.

We've got heavier concentration of what I would say fiberglass saltwater ski and wake than we do mix of let's just call it aluminum and pontoon and so we.

And there are no more questions at this time I'd like to turn the call to Andy for closing remark.

In conclusion as we navigate these dynamic market conditions, we remain committed to our goal of providing the highest quality products and services drove better together values, which guide us in everything we do we will continue.

We still see the we still see strength in the fiberglass market saltwater market.

And as well even in the freshwater market, we're seeing resilience there today too. So our mix is geared towards the I would say a little bit of a higher end votes.

To strategically invest in our business driving scalability and pursuing strategic diversification to ensure our long term success.

Which remains strong and solid to date, we've not seen tremendous falloff on retail we do think that there will be some softening as we talk about in our estimates and our expectations for full year market, which we've built into our model, but overall I think theres balance in the mix that's out there today as we've mentioned as it relates to dealer inventories dealer inventories are lower than they've been hyster.

Our resilient business model has withstood the challenges of the past year, and we remain confident in our ability to pivot and deliver value to our shareholders over the long term.

We thank everyone, who has joined us on the call today and look forward to continuing to create long term value for our stakeholders.

<unk> and we're not expecting retail to fall off a cliff.

Thank you ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation you may disconnect. Your lines at this time and have a great day.

And feel pretty good about where we sit today.

Once again Thats Star one if you do have a question or comment.

Yeah.

Okay.

And there are no more questions at this time I would like to turn the call to Andy for closing remarks.

To strategically invest in our business driving scalability and pursuing strategic diversification to ensure our long term success.

Our resilient business model has withstood the challenges of the past year, and we remain confident in our ability to pivot and deliver value to our shareholders over the long term.

We thank everyone, who has joined us on the call today and look forward to continuing to create long term value for our stakeholders.

Thank you ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation you may disconnect. Your lines at this time and have a great day.

[music].

Okay.

[music].

Q1 2023 Patrick Industries Inc. Earnings Call

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