patk-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ……………… to ………………

Commission file number 000-03922

PATRICK INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


Indiana			35-1057796
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


107 W. Franklin St.
Elkhart, IN						46516
(Address of principal executive offices)						(ZIP Code)

(574) 294-7511

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, no par value	PATK	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 3, 2024, there were 22,401,501 shares of the registrant’s common stock outstanding.

PATRICK INDUSTRIES, INC.

TABLE OF CONTENTS


			Page No.
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)			3

Condensed Consolidated Statements of Income First Quarter ended March 31, 2024 and April 2, 2023			3

Condensed Consolidated Statements of Comprehensive Income First Quarter ended March 31, 2024 and April 2, 2023			4

Condensed Consolidated Balance Sheets March 31, 2024 and December 31, 2023			5

Condensed Consolidated Statements of Cash Flows First Quarter ended March 31, 2024 and April 2, 2023			6

Condensed Consolidated Statements of Shareholders' Equity First Quarter ended March 31, 2024 and April 2, 2023			7

Notes to Condensed Consolidated Financial Statements			8

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			18

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			25

ITEM 4. CONTROLS AND PROCEDURES			26

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS			27

ITEM 1A. RISK FACTORS			27

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES			27

ITEM 5. OTHER INFORMATION			27

ITEM 6. EXHIBITS			28

SIGNATURES			29

PART 1: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	First Quarter Ended
($ in thousands, except per share data)	March 31, 2024		April 2, 2023
NET SALES	$	933,492	$	900,100
Cost of goods sold	728,637		705,856
GROSS PROFIT	204,855		194,244
Operating expenses:
Warehouse and delivery	37,449		35,845
Selling, general and administrative	85,246		82,401
Amortization of intangible assets	22,818		19,764
Total operating expenses	145,513		138,010
OPERATING INCOME	59,342		56,234
Interest expense, net	20,090		18,484
Income before income taxes	39,252		37,750
Income taxes	4,159		7,577
NET INCOME	$	35,093	$	30,173

BASIC EARNINGS PER COMMON SHARE	$	1.62	$	1.40
DILUTED EARNINGS PER COMMON SHARE	$	1.59	$	1.35

Weighted average shares outstanding – Basic	21,653		21,591
Weighted average shares outstanding – Diluted	22,080		22,512

See accompanying Notes to Condensed Consolidated Financial Statements.

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	First Quarter Ended
($ in thousands)	March 31, 2024		April 2, 2023
NET INCOME	$	35,093	$	30,173
Other comprehensive income, net of tax:

Foreign currency translation loss	(32)		(9)
Total other comprehensive loss	(32)		(9)
COMPREHENSIVE INCOME	$	35,061	$	30,164

See accompanying Notes to Condensed Consolidated Financial Statements.

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


	As of
($ in thousands)	March 31, 2024		December 31, 2023
ASSETS
Current Assets
Cash and cash equivalents	$	17,610	$	11,409
Trade and other receivables, net	278,337		163,838
Inventories	514,543		510,133
Prepaid expenses and other	48,884		49,251
Total current assets	859,374		734,631
Property, plant and equipment, net	371,128		353,625
Operating lease right-of-use assets	190,507		177,717
Goodwill	755,729		637,393
Intangible assets, net	848,753		651,153
Other non-current assets	7,385		7,929
TOTAL ASSETS	$	3,032,876	$	2,562,448
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current maturities of long-term debt	$	7,500	$	7,500
Current operating lease liabilities	51,839		48,761
Accounts payable	196,747		140,524
Accrued liabilities	104,456		111,711
Total current liabilities	360,542		308,496
Long-term debt, less current maturities, net	1,392,099		1,018,356
Long-term operating lease liabilities	142,799		132,444
Deferred tax liabilities, net	67,903		46,724
Other long-term liabilities	10,997		11,091
TOTAL LIABILITIES	1,974,340		1,517,111
SHAREHOLDERS’ EQUITY
Common stock	193,930		203,258

Accumulated other comprehensive loss	(1,031)		(999)
Retained earnings	865,637		843,078
TOTAL SHAREHOLDERS’ EQUITY	1,058,536		1,045,337
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,032,876	$	2,562,448

See accompanying Notes to Condensed Consolidated Financial Statements.

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	First Quarter Ended
($ in thousands)	March 31, 2024		April 2, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	35,093	$	30,173
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	40,335		35,510
Stock-based compensation expense	5,460		5,242



Other	853		2,056
Change in operating assets and liabilities, net of acquisitions of businesses:
Trade and other receivables, net	(89,565)		(83,354)
Inventories	17,781		39,502
Prepaid expenses and other assets	2,619		6,314
Accounts payable, accrued liabilities and other	22,600		(36,393)
Net cash provided by (used in) operating activities	35,176		(950)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(15,495)		(20,266)
Proceeds from sale of property, plant and equipment	167		92
Business acquisitions, net of cash acquired	(329,642)		(478)
Other investing activities	(25,754)		(2,925)
Net cash used in investing activities	(370,724)		(23,577)
CASH FLOWS FROM FINANCING ACTIVITIES

Term debt repayments	(1,875)		(1,875)
Borrowings on revolver	688,958		354,324
Repayments on revolver	(313,958)		(124,613)

Repayments of convertible notes	—		(172,500)
Stock repurchases under buyback program	—		(3,660)
Cash dividends paid to shareholders	(13,013)		(10,761)
Taxes paid for share-based payment arrangements	(14,788)		(7,499)

Payment of contingent consideration from a business acquisition	(3,500)		(1,370)
Proceeds from exercise of common stock options	—		492
Other financing activities	(75)		(75)
Net cash provided by financing activities	341,749		32,463
Net increase in cash and cash equivalents	6,201		7,936
Cash and cash equivalents at beginning of year	11,409		22,847
Cash and cash equivalents at end of period	$	17,610	$	30,783

See accompanying Notes to Condensed Consolidated Financial Statements.

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)


First Quarter Ended March 31, 2024
($ in thousands)	Common Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Total
Balance December 31, 2023	$	203,258	$	(999)	$	843,078	$	1,045,337
Net income	—		—		35,093		35,093
Dividends declared	—		—		(12,534)		(12,534)
Other comprehensive loss, net of tax	—		(32)		—		(32)

Repurchases of shares for tax payments related to the vesting and exercising of share-based grants	(14,788)		—		—		(14,788)

Stock-based compensation expense	5,460		—		—		5,460
Balance March 31, 2024	$	193,930	$	(1,031)	$	865,637	$	1,058,536


First Quarter Ended April 2, 2023
($ in thousands)	Common Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Total
Balance December 31, 2022	$	197,003	$	(695)	$	758,861	$	955,169
Net income	—		—		30,173		30,173
Dividends declared	—		—		(10,086)		(10,086)
Other comprehensive loss, net of tax	—		(9)		—		(9)
Stock repurchases under buyback program	(485)		—		(3,175)		(3,660)
Repurchase of shares for tax payments related to the vesting and exercising of share-based grants	(7,499)		—		—		(7,499)
Issuance of shares upon exercise of common stock options	492		—		—		492
Stock-based compensation expense	5,242		—		—		5,242
Balance April 2, 2023	$	194,753	$	(704)	$	775,773	$	969,822

See accompanying Notes to Condensed Consolidated Financial Statements.

PATRICK INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Patrick Industries, Inc. (“Patrick”, the “Company”, "we", "our") contain all adjustments (consisting of normal recurring adjustments) that we believe are necessary to present fairly the Company’s financial position as of March 31, 2024 and December 31, 2023, its results of operations for the first quarter ended March 31, 2024 and April 2, 2023, and its cash flows for the three months ended March 31, 2024 and April 2, 2023.

Patrick's unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The accompanying unaudited condensed consolidated financial statements for Patrick do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to Patrick’s Audited Consolidated Financial Statements for the year ended December 31, 2023, and corresponding notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024.

The Company maintains its financial records on the basis of a fiscal year ending on December 31, with the fiscal quarters spanning approximately thirteen weeks. The first quarter ends on the Sunday closest to the end of the first thirteen-week period. The second and third quarters are thirteen weeks in duration and the fourth quarter is the remainder of the year. The first quarter of fiscal year 2024 ended on March 31, 2024 and the first quarter of fiscal year 2023 ended on April 2, 2023.

Reclassified Amounts

Certain amounts have been reclassified in prior year financial statements to conform with current year presentation. These reclassifications are immaterial to the overall financial statements.

Summary of Significant Accounting Policies

A summary of significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024

New Accounting Standards

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification.

The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s unaudited condensed consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, "Improvements to Reportable Segment Disclosures". This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss

in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This ASU will likely result in additional required disclosures when adopted. The Company is currently evaluating this guidance to determine the impact on its disclosures; however, adoption will not otherwise impact our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures". This ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. The new standard is effective for fiscal years beginning after December 15, 2024, with retrospective application permitted. The Company is currently evaluating this guidance to determine the impact on its disclosures; however, adoption will not otherwise impact our consolidated financial statements.

NOTE 2. REVENUE RECOGNITION

In the following table, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportable segment:


	First Quarter Ended March 31, 2024
($ in thousands)	Manufacturing		Distribution		Total
Market type:
Recreational Vehicle	$	291,811	$	129,178	$	420,989
Marine	146,045		9,270		155,315
Powersports	79,959		2,711		82,670
Manufactured Housing	69,425		86,699		156,124
Industrial	110,303		8,091		118,394
Total	$	697,543	$	235,949	$	933,492


	First Quarter Ended April 2, 2023
($ in thousands)	Manufacturing		Distribution		Total
Market type:
Recreational Vehicle	$	252,444	$	114,516	$	366,960
Marine	227,230		10,741		237,971
Powersports	29,562		3,239		32,801
Manufactured Housing	64,189		69,235		133,424
Industrial	118,971		9,973		128,944
Total	$	692,396	$	207,704	$	900,100

Contract Liabilities

Contract liabilities, representing upfront payments from customers received prior to satisfying performance obligations, were immaterial as of the beginning and end of all periods presented and changes in contract liabilities were immaterial during all periods presented.

NOTE 3. INVENTORY

Inventories consist of the following:


($ in thousands)	March 31, 2024		December 31, 2023
Raw materials	$	274,553	$	269,786
Work in process	18,939		16,596
Finished goods	106,977		107,675
Less: reserve for inventory obsolescence	(17,882)		(15,990)
Total manufactured goods, net	382,587		378,067
Materials purchased for resale (distribution products)	142,301		140,147
Less: reserve for inventory obsolescence	(10,345)		(8,081)
Total materials purchased for resale (distribution products), net	131,956		132,066
Total inventories	$	514,543	$	510,133

NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the three months ended March 31, 2024 by segment are as follows:


($ in thousands)	Manufacturing		Distribution		Total
Balance - December 31, 2023	$	560,370	$	77,023	$	637,393
Acquisitions	118,320		—		118,320
Adjustments to preliminary purchase price allocations	16		—		16
Balance - March 31, 2024	$	678,706	$	77,023	$	755,729

Intangible assets, net consist of the following as of March 31, 2024 and December 31, 2023:


($ in thousands)	March 31, 2024		December 31, 2023
Customer relationships	$	910,934	$	729,664
Non-compete agreements	22,646		21,561
Patents	86,964		69,401
Trademarks	217,527		197,027
Intangible assets, gross	1,238,071		1,017,653
Less: accumulated amortization	(389,318)		(366,500)
Intangible assets, net	$	848,753	$	651,153

Changes in the carrying value of intangible assets for the three months ended March 31, 2024 by segment are as follows:


($ in thousands)	Manufacturing		Distribution		Total
Balance - December 31, 2023	$	553,703	$	97,450	$	651,153
Additions	194,728		25,690		220,418
Amortization	(19,965)		(2,853)		(22,818)

Balance - March 31, 2024	$	728,466	$	120,287	$	848,753

NOTE 5. ACQUISITIONS

General

Business combinations generally take place to strengthen Patrick's positions in existing markets and increase its market share and per unit content, expand into additional markets, and gain key technology. Acquisitions are accounted for under the acquisition method of accounting. For each acquisition, the excess of the purchase consideration over the fair value of the net assets acquired is recorded as goodwill, which generally represents the combined value of the Company’s existing purchasing, manufacturing, sales, and systems resources with the organizational talent and expertise of the acquired companies’ respective management teams to maximize efficiencies, market share growth and net income.

The Company completed four acquisitions in the first three months of 2024 (the "2024 Acquisitions"). For the first quarter ended March 31, 2024, net sales included in the Company's condensed consolidated statements of income related to the 2024 Acquisitions were $58.1 million, and operating income was $11.0 million. Acquisition-related costs associated with the 2024 Acquisitions were $5.0 million. Assets acquired and liabilities assumed in the acquisitions were recorded on the Company's condensed consolidated balance sheet at their estimated fair values as of the respective dates of acquisition. For each acquisition, the Company completes its allocation of the purchase price to the fair value of acquired assets and liabilities within a one year measurement period. The Company completed no acquisitions in the first quarter of 2023.

In connection with certain acquisitions, the Company is required to pay additional cash consideration if certain financial results of the acquired businesses are achieved. The Company records a liability for the estimated fair value of the contingent consideration related to each of these acquisitions as part of the initial purchase price based on the present value of the expected future cash flows and the probability of future payments at the date of acquisition.

Changes in the fair value of contingent consideration for the three months ended March 31, 2024 are as follows:


($ in thousands)
Balance - December 31, 2023	$	8,510


Settlements	(3,880)
Balance - March 31, 2024	$	4,630

The following table shows the balance sheet location of the fair value of contingent consideration and the maximum amount of contingent consideration payments the Company may be subject to at March 31, 2024 and December 31, 2023:


($ in thousands)	March 31, 2024		December 31, 2023
Accrued liabilities	$	3,620	$	7,500
Other long-term liabilities	1,010		1,010
Total fair value of contingent consideration	$	4,630	$	8,510
Maximum amount of contingent consideration	$	4,630	$	8,510

2024 Acquisitions

The Company completed four acquisitions in the first three months ended March 31, 2024, including the following previously announced acquisition:

Company

Segment

Description

Sportech, LLC ("Sportech")

Manufacturing

Leading designer and manufacturer of high-value, complex component solutions sold to powersports original equipment manufacturers ("OEMs"), adjacent market OEMs and the aftermarket, including integrated door systems, roofs, canopies, bumpers, windshields, fender flares and cowls, based in Elk River, Minnesota, acquired in January 2024.

Inclusive of three acquisitions not discussed above, total cash consideration for the 2024 Acquisitions was approximately $329.6 million. The preliminary purchase price allocations are subject to valuation activities being finalized, and thus certain purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its estimates.

2023 Acquisitions

The Company completed three acquisitions in the year ended December 31, 2023, including the following previously announced acquisition:

Company

Segment

Description

BTI Transport

Distribution

Provider of transportation and logistics services to marine OEMs and dealers, based in Elkhart, Indiana, acquired in April 2023. The acquired business operates under the Patrick Marine Transport brand.

Inclusive of two acquisitions not discussed above, total cash consideration for the 2023 Acquisitions was approximately $26.3 million, plus contingent consideration over a two-year period based on future performance in connection with certain acquisitions. The preliminary purchase price allocations are subject to valuation activities being finalized, and thus certain purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its estimates. Changes to preliminary purchase accounting estimates recorded in the first quarter ended March 31, 2024 related to the 2023 Acquisitions were immaterial.

The following table summarizes the fair values of the assets acquired and the liabilities assumed as of the date of acquisition for the 2024 Acquisitions and 2023 Acquisitions:


			2024 Acquisitions						2023 Acquisitions
($ in thousands)			Sportech		All Others		Total		Total
Consideration
	Cash, net of cash acquired		$	320,078	$	9,570	$	329,648	$	26,294
	Working capital holdback and other, net		(2,489)		110		(2,379)		—

	Contingent consideration(1)		—		—		—		3,500
		Total consideration	$	317,589	$	9,680	$	327,269	$	29,794

Assets Acquired
	Trade receivables		$	21,544	$	953	$	22,497	$	619
	Inventories		21,021		1,170		22,191		4,430
	Prepaid expenses & other		1,676		203		1,879		105
	Property, plant & equipment		19,685		1,486		21,171		10,277
	Operating lease right-of-use assets		15,096		1,283		16,379		1,044
	Identifiable intangible assets
		Customer relationships	151,000		4,580		155,580		10,270
		Non-compete agreements	1,000		85		1,085		430
		Patents and developed technology	17,500		—		17,500		—
		Trademarks	20,500		—		20,500		—
Liabilities Assumed
	Current portion of operating lease obligations		(1,437)		(585)		(2,022)		(262)
	Accounts payable & accrued liabilities		(31,831)		(444)		(32,275)		(514)
	Operating lease obligations		(13,658)		(699)		(14,357)		(781)
	Deferred tax liabilities		(21,179)		—		(21,179)		—
		Total fair value of net assets acquired	$	200,917	$	8,032	$	208,949	$	25,618
		Goodwill(2)	116,672		1,648		118,320		5,921
		Bargain purchase gain(3)	—		—		—		(1,745)
			$	317,589	$	9,680	$	327,269	$	29,794

(1) These amounts reflect the acquisition date fair value of contingent consideration based on expected future results relating to certain acquisitions.

(2) Goodwill is tax-deductible for all acquisitions, except Sportech, which is only partially tax-deductible.

(3) In connection with one of the 2023 Acquisitions, the Company recognized a $1.7 million bargain purchase gain. A bargain purchase gain is recognized when the net assets acquired in a business combination have a higher fair value than the consideration paid. This gain is primarily attributable to the fair value assigned to customer relationships in that acquisition and is included in "Selling, general, and administrative" in the consolidated statement of income for the year ended December 31, 2023.

We estimate the value of acquired property, plant, and equipment using a combination of the income, cost, and market approaches, such as estimates of future income growth, capitalization rates, discount rates, and capital expenditure needs of the acquired businesses.

We estimate the value of customer relationships using the multi-period excess earnings method, which is a variation of the income approach, calculating the present value of incremental after-tax cash flows attributable to the asset. Non-compete agreements are valued using a discounted cash flow approach, which is a variation of the income approach, with and without the individual counterparties to the non-compete agreements. Trademarks and patents are valued using the relief-from-royalty method, which applies an estimated royalty rate to forecasted future cash flows, discounted to present value.

The estimated useful life for customer relationships is 10 years. The estimated useful life for non-compete agreements is 5 years. The estimated useful life for patents and developed technology 10 years. Trademarks have an indefinite useful life.

Pro Forma Information

The following pro forma information for the first quarter ended March 31, 2024 and April 2, 2023 assumes the 2024 Acquisitions and 2023 Acquisitions occurred as of the beginning of the year immediately preceding each such acquisition. The pro forma information contains the actual operating results of the 2024 Acquisitions and 2023 Acquisitions combined with the results prior to their respective acquisition dates, adjusted to reflect the pro forma impact of the acquisitions occurring as of the beginning of the year immediately preceding each such acquisition.

The pro forma information includes financing and interest expense charges based on incremental borrowings incurred in connection with each transaction. In addition, the pro forma information includes amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of $1.8 million and $5.6 million, for the first quarter ended March 31, 2024 and April 2, 2023, respectively.


	First Quarter Ended
($ in thousands, except per share data)	March 31, 2024		April 2, 2023
Revenue	$	957,363	$	977,868
Net income	$	34,380	$	29,048
Basic earnings per common share	$	1.59	$	1.35
Diluted earnings per common share	$	1.56	$	1.30

The pro forma information is presented for informational purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of the periods indicated above.

NOTE 6. STOCK-BASED COMPENSATION

The Company's Board of Directors (the "Board") approved various stock-based grants under the Company’s 2009 Omnibus Incentive Plan in the three months ended March 31, 2024 totaling 213,051 shares in the aggregate at an average fair value of $100.08 at grant date for a total fair value at grant date of $21.3 million.

The Company recorded expense, net of forfeitures, of approximately $5.5 million in the first quarter ended March 31, 2024 for its stock-based compensation plans in the condensed consolidated statements of income. Stock-based compensation expense of $5.2 million was recorded in the first quarter ended April 2, 2023.

As of March 31, 2024, there was approximately $34.0 million of total unrecognized compensation cost related to stock-based compensation arrangements granted under incentive plans. That cost is expected to be recognized over a weighted-average period of 21.9 months.

NOTE 7. EARNINGS PER COMMON SHARE

Earnings per common share calculated for the first quarter of 2024 and 2023 is as follows:


	First Quarter Ended
($ in thousands, except per share data)	March 31, 2024		April 2, 2023
Numerator:
Earnings for basic earnings per common share calculation	$	35,093	$	30,173
Effect of interest on potentially dilutive convertible notes, net of tax	—		162
Earnings for diluted earnings per common share calculation	$	35,093	$	30,335
Denominator:
Weighted average common shares outstanding - basic	21,653		21,591
Weighted average impact of potentially dilutive convertible notes	205		658
Weighted average impact of potentially dilutive securities	222		263
Weighted average common shares outstanding - diluted	22,080		22,512
Earnings per common share:
Basic earnings per common share	$	1.62	$	1.40
Diluted earnings per common share	$

SEC Form 10-Q filed by Patrick Industries Inc.