Business is booming and the near-term future looks bright, Patrick Industries President and CEO Andy Nemeth told analysts.
All the success comes despite a sluggish supply chain, which Nemeth said is poised to recover fully in 2021.
“I think there’s hotspots kind of across the space. But the supply base has been extremely resilient in managing and adapting to changing circumstances and run rates as it relates to the industry,” Nemeth said Thursday, according to a transcript of the earnings call provided by The Motley Fool. “So I view this as short term, and I view the supply base really being able to position itself well to support the increased run rates that we’re expecting for next year.”
Asked whether Patrick made gains in share because it was able to continue supplying where competitors struggled, Nemeth said the company’s success in recent months came because it decided to narrow its customer focus.
“Our share gains have been relatively nominal. We picked up a little bit, but we’ve really been focused on making sure that we’re taking care of our existing customers at this point in time, given the significance of the ramp-up,” he said. “I think as we look forward, we’re really excited about the opportunity to capture some share as we head through Q4 and into Q1 of next year, especially with the initiatives that we’re putting in place on the capital side to be able to support that growth.”
Things have been moving quickly, though. Nemeth said dealer inventories still are at “extremely low historical levels.” By Patrick’s estimates, 45,000 to 50,000 additional units were pulled from the inventory channel in the past three months, pushing the annual total over 100,000. Over the past 18 months, Patrick estimates that figure to be more than 165,000.
“We continue to be energized as well about the longer-term growth potential of the RV market,” Nemeth said. “The continued strong traffic and engagement at the dealers from new RV buyers, unprecedented awareness of the RV lifestyle, OEM and dealer commitments to driving a strong value proposition of the industry and promoting the lifestyle for future generations, and the recently enacted Great American Outdoors Act will all provide greater opportunities and capacity for Americans to experience camping outdoors.”
Nemeth said between lean inventories and a broadening market, the company forecast strong trends through 2021 and into 2022.
“We think that the new buyers have certainly been on top of what was already strong fundamental demographic trends that were supporting the market,” he said. “And so certainly the need and opportunity for social distancing but being able to get away has been a very attractive option for many consumers. We believe that, that COVID fundamental, if you will, the new buyer turn is already on top of a strong demographic trend. And we believe that’s going to continue for the foreseeable future into ‘21, especially with the COVID overhang that continues to exist.”
Patrick is based in Elkhart, where COVID-19 cases dramatically are rising. Nemeth said the company has avoided serious clusters thus far.
“Our team has done a fantastic job of implementing COVID protocols. We’ve not had any serious clusters,” he said. “We’ve had cases for sure, but our protocols are in place, and I believe that our team, again, has done a fabulous job of protecting our employees and taking care of our employees, especially while in the facility. So no major issues at this point as it relates to COVID.
“The tremendous hard work, dedication, drive and passion exhibited by our team members continues to be both humbling and inspiring as they respond to the strong demand for our products and adhere to equally demanding production schedules,” he said.
