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Motley Fool: Patrick ‘ROI’ Outshines RV Peers

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May 28, 2014 by   Leave a Comment

Editor’s Note: The following is a column by The Motley Fool analyzing the growth of Patrick Industries Inc. and its healthy return on investment.

Patrick Industries, a national manufacturer and distributor of a wide variety of building and component products for the recreational vehicle industry, has outshone its peers in the past few years.

A dollar invested in a customized group of eight listed peers in 2008, including companies like Thor Industries Inc. and Drew Industries Inc., would have made the investor $7.50 by the end of 2013. In contrast, the same dollar invested in Patrick industries would have returned $45 to that investor over the same period.

Industry growth

Following the 58% decline in RV wholesale unit shipments from about 391,000 in 2006 to 166,000 in 2009, the RV industry is now seeing clearer skies. RV wholesale unit shipments have recovered strongly to almost double to 321,000 units in 2013, with expectations of a 6% year-on-year growth in 2014.

More than 9 million Americans are currently RV owners, with RVs gaining acceptance as a mainstream option for vacation travel and other leisure activities. Looking ahead, with more aging baby boomers near retirement age, RV ownership should grow further, as most people buy their first RV at a later age.

However, this doesn’t fully explain Patrick Industries’ outperformance relative to its peers.

New products

In addition to adding more customers, selling more items to each customer is another way to drive revenue growth. In 2013, Patrick Industries launched 60 new products. Examples include new styles of interior passage doors, an expanded range of cabinet door styles, and new variations with respect to colors, patterns, and wood types for panels and mouldings.

Apart from leveraging on acquisitions to expand its product range, Patrick Industries also worked on upgrading its manufacturing and distribution capabilities. Firstly, it bought over a previously leased distribution facility in 2013 to expand its inventory holding capacity. Secondly, Patrick Industries also upgraded some of its existing manufacturing equipment to enhance production efficiency last year.

For the full story click here.

 

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