Patrick Industries reported third quarter 2023 financial results Thursday, saying net sales fell 22% from the third quarter of 2022. RV net sales totaled $400 million, down 24% from the third quarter of 2022.
Patrick’s content per RV fell just 2%, driven by actions to pass along favorable pricing to customers. The dip reflected declining commodity costs and smaller units taking a larger percentage of the production mix and was offset partially by market share gains.
CEO Andy Nemeth credited Patrick companies for being flexible with manufacturing as volumes slowed in 2023. He said the company is prepared to ramp up production when RV OEMs make more RVs.
“Over the last 15 months, OEMs in the RV industry have skillfully managed their production downward, showcasing the industry’s real-time scalability, adaptability and maturity,” Nemeth said. “As we head into the fourth quarter, we see the industry currently matched in a period where retail registrations and wholesale production are closely aligned and positioned for a one-to-one basis and very nimble, ready to pivot.”
Patrick President Jeff Rodino said the company estimated dealers have 12 to 14 weeks of inventory on hand. That level is down from 19 to 21 weeks at the start of the year, 16 to 18 weeks at the end of June and the 26 to 30-week historical norm.
“From a model year mix perspective, as it relates to the current dealer inventory levels,” Rodino said, “we believe the ratio of prior model year units that currently sit on dealer lots reflects a more normal relationship compared to what we experienced over the first half of the year. For context, we estimate just 300,000 model year ’23 units were built versus an estimated 650,000 model year ’22 units.”
Nemeth said Patrick’s model of providing good-better-best product options to customers remains the supplier’s primary strategy.
“With this model,” he said, “we expect to continue to gain share, which will continue to pay dividends when production levels increase.”
Rodino said OEM de-contenting in 2024 models would not be a significant issue for Patrick.
“I think what we have really seen after the model change was not necessarily a lot of de-contenting, but bringing in smaller floorplans, introductory floorplans, and trying to hit that lower end of the market,” Rodino said. “It is not necessarily de-contenting as much as not as much content in some of the units that are being built on the smaller range.”
He said Patrick picked up market share over the past 12 months as its RV sales team pushed hard and created annual growth of $150 million in content per RV in the past year.
“I think that is going to really offset anything that is in the lower end units,” he said. “We have not seen a ton of de-contenting. We feel pretty good about where we stand today.”