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Patrick (PATK) Buys Front Range, Expands in Industrial Market

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Patrick Industries, Inc. PATK has acquired Front Range Stone, Inc., a fabricator and installer of a full suite of natural stone, quartz, solid surface and laminate countertops. However, financial terms of the transaction have been kept under wraps.

Englewood, CO-based Front Range, which recorded $30 million revenues in 2019, mainly serves big box home improvement retailers, home builders and commercial contractors in the industrial market. It has a comprehensive product suite that attracts a wide variety of customers in various industrial markets it serves, primarily in Colorado and southern Wyoming.

The Front Range buyout will leverage Patrick’s existing industrial operations to expand the latter’s geographic presence in the Great Plains and western housing markets.

Patrick’s buyout of Front Range comprises the acquisition of working capital and other assets. The company will continue to operate Front Range on a stand-alone basis under its brand name in the existing facilities. 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. In August 2020, Patrick acquired Synergy RV Transport, a Goshen, IN-based transportation and logistics service provider, mainly for original equipment manufacturers as well as dealers in the recreational vehicle market. However, financial terms of the deal are not yet disclosed.

Notably, the company did not make any acquisition 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.

Notably, shares of this Zacks Rank #2 (Buy) company have gained 101.9% in the past six months, outperforming the industry’s 60.5% rally. The company is poised to gain further from improving housing market prospects, accretive acquisitions and solid geographic expansion efforts.


Other Key Picks

Other top-ranked stocks in the same space include TopBuild Corp. BLD, Installed Building Products Inc. IBP and Advanced Drainage Systems Inc. WMS, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TopBuild’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, with the average surprise being 16%.

Installed Building Products’ earnings for the current year are expected to grow 26.4% year over year.

Advanced Drainage Systems has a three-five year expected EPS growth rate of 46.3%.

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