While speaking to analysts and investors on a conference call discussing third quarter earnings, Patrick Industries CEO Andy Nemeth said he believes restocking issues may continue into 2023.
Nemeth noted raw material shortages in various commodities and products that are constraining purchasing. However, the executive reported retail RV dealer traffic has remained strong across new and existing buyers.
“Trends in our primary end markets remained very positive, with channel restocking needed across all sectors and wholesale demand visibility that points well into 2022 and likely into 2023,” Nemeth said. “The benefits of leisure lifestyle are now part of a mainstream narrative, which is growing on its own accord.”
Jake Petkovich, Patrick’s chief financial officer, said he believes 2023 will be a strong production year for Patrick Industries. He said the company likely will be able to fill inventory loss through 2022 and 2023 but cautioned it could take time for companies such as Patrick to find the “right velocity of inventory.”
“At the end of the day, we fully expect it will be somewhere north of where it is today and less than what it was on a pre-pandemic basis,” Petkovich said.
Petkovich said through the next year, companies will seek the right cadence in getting units in and out. He said Patrick probably would start to find the cadence either late in 2022 or into the first half of 2023.
Nemeth said he believes the industry will find a new normal by the end of 2022. He cautioned about upcoming fluctuations in OEM shipments versus retail demand, because of the significant backlogs. He also said the company hopes to see the restoration of seasonality soon.
“We would like to see a little bit of seasonality to give the teams a break,” Nemeth said. “So we are not so laser-focused on just every single month and annualizing it as much as we have kind of modeled out some seasonality into our plans. It still does not get us to an expectation until the end of 2022.”
