ELKHART, Ind., April 28, 2011 -- Patrick Industries, Inc. (NASDAQ: PATK), a major manufacturer and distributor of building and component products for the recreational vehicle ("RV"), manufactured housing ("MH") and industrial markets, today reported its financial results for the first quarter ended March 27, 2011.
For the first quarter of 2011, Patrick reported an increase in net sales of $6.0 million or 9.4%, to $69.5 million from $63.5 million in the 2010 period reflecting the impact of an acquisition completed during the third quarter of 2010 and increased market penetration. According to industry associations, wholesale unit shipments in the RV industry, which represented 65% of the Company's sales in the quarter, increased approximately 9% in the first quarter of 2011 compared to the prior year period.
The Company estimates that unit shipments in the MH industry, which represented 20% of the Company's first quarter sales, were down approximately 18% from the first quarter of 2010. The industrial market sector, which accounted for 15% of the Company's first quarter 2011 sales and is tied to the residential housing market, saw new housing starts decrease by approximately 10% from the first quarter of 2010.
The Company reported a net loss of $1.2 million or $0.13 per diluted share in the first quarter of 2011. The net loss was impacted by non-cash charges related to the refinancing of Patrick's former credit facility, including $0.6 million or $0.06 per diluted share for the write-off of the remaining unamortized loss on interest rate swaps that were terminated and paid off during the quarter and the write-off of $0.4 million or $0.04 per diluted share for financing costs, as well as a non-cash charge of $0.3 million or $0.03 per diluted share related to mark-to-market accounting for common stock warrants. This compares to net income of $0.9 million or $0.09 per diluted share in the same period of 2010 which included a net gain on the sale of fixed assets of $2.8 million or $0.28 per diluted share, partially offset by a non-cash charge of $0.3 million or $0.03 per diluted share related to stock warrant accounting.
Gross profit as a percentage of net sales rose to 11.4% from 10.2% in 2010 primarily reflecting improved labor and production efficiencies at one of our significant manufacturing operating units that resulted from organizational changes, process changes, and pricing improvements implemented in the fourth quarter of 2010 and into the first quarter of 2011.
As previously announced, on March 31, 2011, the Company entered into a new credit agreement with Wells Fargo Capital Finance, LLC ("WFCF") to establish a four-year $50.0 million revolving secured senior credit facility (the "2011 Credit Facility"). In conjunction with the establishment of the 2011 Credit Facility, all of the Company's outstanding short-term indebtedness has been classified as a long-term liability as of March 27, 2011. Additional subordinated debt financing of $5.0 million, in the form of secured senior subordinated notes, was provided by Tontine Capital Overseas Master Fund II, L.P., a significant shareholder of Patrick, and Northcreek Mezzanine Fund I, L.P. As part of the consideration for the notes, the Company issued warrants to purchase 125,000 shares of common stock to each of Tontine and Northcreek at an exercise price of $0.01 per share. Additionally, the Company terminated and paid off its two interest rate swap agreements on March 25, 2011. The swap agreements had a total fair value of $1.1 million on the termination date. The remaining unamortized loss on the swaps of $0.6 million, previously included in accumulated other comprehensive loss, was charged to interest expense in the first quarter of 2011.
"In conjunction with the support of our new credit facility and our organizational strategic agenda, we plan to continue to make targeted capital investments and acquisitions to support our new business initiatives and leverage our operating platform to more fully integrate sales efforts to broaden customer relationships and proactively meet customer demand," said Todd Cleveland, President and CEO.
"We anticipate that the new credit facility will provide Patrick with the ability to meet both its short-term and long-term operating needs over the next four years. As we move through the remainder of 2011 with the expectation of fluctuating market conditions, we are excited about, and remain focused on, gaining market share, new product introductions and product line extensions, strategic acquisitions in our existing businesses and similar markets, and increasing brand recognition."
About Patrick Industries
Patrick Industries, Inc. (www.patrickind.com) is a major manufacturer of component products and distributor of building products serving the recreational vehicle, manufactured housing, kitchen cabinet, household furniture, fixtures and commercial furnishings, marine, and other industrial markets and operates coast-to-coast through locations in 12 states.
Patrick's major manufactured products include decorative vinyl and paper panels, wrapped profile mouldings, cabinet doors and components, interior passage doors, slotwall and slotwall components, and countertops. The Company also distributes drywall and drywall finishing products, electronics, adhesives, wiring, electrical and plumbing products, cement siding, interior passage doors, roofing products, laminate flooring, and other miscellaneous products.
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