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Patrick (PATK) Buys Synergy RV, Boosts RV Transport Platform

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Patrick Industries, Inc. (PATK - Free Report) has acquired Synergy RV Transport, a Goshen, IN-based transportation and logistics service provider, mainly for original equipment manufacturers (OEMs) as well as dealers in the recreational vehicle market. However, financial terms of the deal are not yet disclosed.

Buyout Synergies

Synergy has a diverse customer base, which includes manufacturers and dealers ranging from nationally known brands to growing mid-size businesses. It utilizes independently contracted drivers to haul towable/flatbed and motorized RVs from RV OEM plants to dealer lots throughout the continental United States.

This buyout is an attractive growth opportunity for Patrick that will enable the company to expand the RV transport platform and network.

The acquisition includes working capital, machinery, equipment and real estate. Patrick will continue to operate Synergy on a stand-alone basis under its brand name in the existing facilities and transport yards.

Synergy's 2019 revenues were $46 million. Patrick expects the acquisition to be immediately accretive to net income per share.

Inorganic Moves to Drive Growth

To complement or expand the existing businesses, Patrick focuses on driving growth in each of its primary markets through the acquisition of companies that are a strategic fit for core businesses, additional product lines, facilities, or other assets.

The company did not make any acquisitions in second-quarter 2020 but completed three buyouts in the first six months of 2020. It acquired Maple City Woodworking Corporation, a Goshen, IN-based manufacturer of hardwood cabinet doors and fascia for the recreational vehicle market. It also acquired SEI Manufacturing, Inc., a Cromwell, IN-based manufacturer of towers, T-Tops,hardtops, rails, gates and other aluminum exterior products for the marine market.

However, the RV industry experienced a five-week production shutdown due to the COVID-19 outbreak, while various marine OEMs had production shutdowns ranging from one to five weeks. Resultantly, Patrick’s second-quarter performance was hurt by business disruption in its end markets related to the COVID-19 pandemic.

Nonetheless, the company witnessed higher demand during the latter half of the second quarter in the RV and marine segments. MH markets benefited from an increase in interest from new consumers, in addition to those already in the retail pipeline. The company expects this momentum to continue in the second half of 2020.

Notably, shares of this Zacks Rank #1 (Strong Buy) company have gained 64.6% in the past year, outperforming the industry’s 31.1% rally. With increased visibility in four primary end markets, the company believes that it will have opportunities to invest strategically in acquisitions and the existing businesses to support the growth of OEM customers.

 

 

Other Key Picks

Other top-ranked stocks in the same space include Owens Corning Inc. (OC - Free Report) , Installed Building Products Inc. (IBP - Free Report) and Aegion Corporation , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Owens Corning’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, with the average surprise being 63.8%.

Installed Building Products’ earnings for the current year are expected to grow 9.7% year over year.

Aegion’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with the average surprise being 91%.

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Owens Corning Inc (OC) - free report >>

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Patrick Industries, Inc. (PATK) - free report >>

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