Patrick Industries Q3 sales down, earnings impacted by cyber attack

Patrick Industries, maker of component parts for the marine, RV and manufactured homes industries, is reporting third-quarter sales were off 2% or US$8.9m compared to 2018 results for the same time period, adding that the company took a US$1.5m hit due to what it calls “a sophisticated cyber-attack” last month.

The Q3 decline was attributed, according to a company news release, primarily to quarter-over-quarter declines in three of its four primary markets. The decline was offset slightly by acquisitions and market share gain.

Revenues from the marine industry, which represented 13% of third quarter 2019 sales, declined 7% over the third quarter of 2018, while estimated marine powerboat wholesale unit shipments declined low-double digits. A similar decline was seen in RV industry sales, which represents about 55% of Q3 sales.

Patrick stated the attack impacted the company’s administrative and production servers, resulting in a disruption of administrative and network operations for approximately two business days. the release states that in response to the attack, the company took steps to ensure customer commitments were honoured and to remediate the attack to minimise the disruption.

Patrick has programs in place to detect, contain and respond to data security incidents, it stated, and has begun an investigation of the attack, including engaging external forensic and other IT experts, and is in the process of implementing further security measures and processes designed to prevent unauthorized access to its information systems and mitigate cybersecurity related risks.

Patrick reported operating income of US$37.4m, a decrease of 16%, or $7.3m, with net income in the quarter of US$21.3m compared to US$27.9m in the third quarter last year.

“Our financial results in the third quarter were negatively impacted by continued RV dealer inventory rebalancing as dealers position themselves for the upcoming 2020 model selling season,” according to Todd Cleveland, chairman and chief executive officer.

“In addition, following weather related softness in marine retail sales in the first half of 2019, we saw inventory recalibration by marine dealers in the third quarter of 2019. Our housing and industrial markets appear to have rebounded from the weather-related issues that impacted the first half of 2019,” he said.