Patrick Industries reported first-quarter earnings last week reflecting the industry slowdown to begin 2023.
Executives discussed their feedback from dealers and industry sources on inventory levels and manufacturing expectations.
Patrick Industries said RV first-quarter revenues fell 55% from the first quarter of 2022. However, RV content per unit increased 22% from the first quarter of 2022 to $5,349. The company attributed the increase to market share gains, pricing and acquisitions.
Chief Financial Officer Jake Petkovich said the company’s Alpha Systems acquisition was behind the increases, in part. Alpha Systems supplies adhesives, sealants, roofing membranes and more to the RV industry.
Petkovich said, “The acquisition of Alpha Systems well over a year ago has been probably the most meaningful acquisition bump to that content per unit.”
Company President Jeff Rodino said Patrick Industries believes dealers are using incentives to clear through 2022 model year RVs, with July expected as the changeover to 2024 RVs.
“The metrics we have outlined imply a net decrease of approximately 5,400 units to dealer inventory in the quarter,” Rodino said. “Our estimates indicate that (trailing 12 months) dealer inventory’s weeks on hand at the end of the first quarter of 2023 have remained consistent with the levels beginning in the back half of 2022 at approximately 18 weeks to 21 weeks.”
Rodino said the levels are below pre-2020 inventory levels of 26 to 30 weeks of inventory on hand. He said the figures imply a potential new normal inventory level, based on four quarters’ worth of data.
He said manufacturers are keeping production flat through April by continuing three-day and four-day workweeks, along with occasional full weeks off.
“We see that continuing now through the end of the second quarter as dealers are really trying to right-size their 2022 inventory,” Rodino said. “I think we will see some continued shutdowns in pockets as they try to keep those inventories in line.”
