Good morning ladies and gentlemen and welcome to the Patrick Industries Incorporated Third Quarter 2016 Earnings Conference Call. My name is John and I'll be your operator for today's call. At this time, all participants are in a listen only mode. Following the prepared remarks we'll conduct a question and answer session. Please note that this conference is being recorded. I will now turn the call over to Julie Ann Kotowski from investor relations. Mrs. Kotowski, you may begin.

Good morning everyone and welcome to Patrick Industries' Third Quarter 2016 Conference Call. I am joined on the call today by Todd Cleveland, CEO; Andy Nemeth, President; and Josh Boone, CFO. On the call this morning we are going to discuss our third quarter and nine months 2016 results and provide an update on our business outlook, and the markets that we serve. Certain statements made in today's conference call regarding Patrick Industries and its operations may be considered forward-looking statements under the security's laws. There are a number of factors, many of which that are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking statement. These factors are identified in our press releases, our form 10-K for the year ended 2015, and in our other filings with the Securities and Exchange Commission. We undertake no obligations to update these statements to provide circumstances or events that occur after the date the forward-looking statements are made except as required by law. I would not like to turn the call over to, Todd Cleveland.

Thank you, Julie Ann. And thank you all for joining us on the call today. This morning we would like to briefly discuss the company's third quarter in nine-month 2016 results and provide an update on the major markets we serve. I will then conclude by providing an update on our overall business outlook. The company's performance in the third quarter and first nine months of 2016 continue to be aligned with our overall expectations and reflected revenue and profitability growth that was supported by overall acquisitions and strategic growth initiatives in all three of the end markets we serve. On the top line, our revenues increased 42% in the third quarter and 34% for the first nine months over the prior year periods. On the bottom-line our net income per diluted share for the third quarter in first nine months of 2016 were 36% and 37% respectively over the prior year. At third quarter 2016 reflected abnormally strong seasonal shipment trends in the RV market coupled with changing demand patterns, typically associated with production of new model year-units for the annual dealer show held in September. Growth in the other two primary markets the MH and industrial markets tempered slightly, but are still up year-over-year. We continue to gain market share in all the industries we serve. As well as successfully integrating the acquisitions we completed for the past two years, including the six that we've done so far in 2016. Now I'll turn the call over to Andy who will further review the markets and performance.

Thank you, Todd. For third quarter 2016 results reflect the continued robust strength in demand patterns in the R.V. industry, which experienced the strongest third quarter wholesale shipment increase since 2010. We've experienced three consecutive quarters of double-digit R.V. shipment growth with continued optimism and positive retail trends, as we head into the fourth quarter and 2017. Additionally, the MH industry continues to show signs of a tailwind; when compared to recent historical levels and our industrial revenues grew 50% from the third quarter of 2015. While the near record third quarter R.V. shipment levels and the record year-to-date shipment levels coupled with the changing seasonal demand patterns related to the annual dealer show season, cost some inefficiencies and labor capacity constraints, in an already tight labor market we continue to focus on the execution of our capital allocation strategy, to drive revenues and content in all of our markets. And strategically invest in equipment and facilities to position ourselves to be able to take advantage of expected growth convenient growth trends in the marketplace. In addition to our acquisition and expansion strategies, we also launched a strategic capital expenditure program, center around tactical investment and facility improvements, increase capacity and more advanced automation to continue to equip ourselves with state of the art production operations, to help offset the impact of the extremely tight labor market in the Midwest. This initiative which involves an incremental $4.5 million of capital spending, that started in the third quarter of 2016 and will extend into early 2017, will help ensure we have adequate capacity to meet demand, improve operating efficiencies and address our customer's changing needs and buying patterns, as they look for new innovative products in the marketplace. Approximately $1.5 million of the $4.5 million was spent in the third quarter…

Thank, Andy. Our net sales for the third quarter increased a $9 million or 42% of the prior year period to $304 million reflecting a combination of acquisition industry and market share growth. Our R.V. revenues were up 42% in the third quarter reflecting robust wholesale shipments of 90% which was the largest quarter increase for 2016, and the largest quarter-over-quarter increase since the fourth quarter of 2012. On a trailing twelve-month basis; our R.V. content per unit increased 20% from $1,739 per unit in 2015 to $2,.85 per unit 2016. With the anniversary of the mix shift toward smaller, less expensive units we started to experience in the second quarter of 2015 coupled with a strong fifth will wholesale shipment growth in the third quarter of 2016. We have seen organic content traction of impacting our content per unit dissipate with the demographic trends toward smaller lower priced D-content [ph] units. Our MH revenues increased 26% for the quarter on estimated unit shipment group with approximately 5%. Our estimated content per unit on a trailing twelve-month basis increase 5% from $1,820 per unit 2015 to $1,911 per unit and the third quarter of 2016. Our industrial revenues were up to 50% in the quarter. While the residential housing market has grown in the slower pace of a modest 4% through the first nine months of the year, we are continuing to expand into new commercial markets, introducing new product lines via acquisitions and product development in penetrating adjacent markets and new geographic regions. The acquisitions we completed in 2015 and in the first nine months of 2016 coupled with our continued focus on leveraging synergies across the organization, expanding our product portfolio and entering new markets and geographic regions. Have been able us to continue to outperform our market…

Thanks, Josh. Overall, we're pleased with our sales and earnings results for the first nine months of 2016 and optimistic about the continued growth as we head into the remainder of the year, both in the short and long-term as we continue to build on the momentum in the industries we serve. The strategic acquisitions we made during 2015 and thus far in 2016 both increased our scale in existing markets and open the door into new markets within a North American footprint, which is now expanded to 16 states. Our pipeline continues to be full with acquisition opportunity across all three markets we serve including adjacent markets, and we have the capacity to continue to grow our business and bring new innovative product lines to existing customer base and the customers we've not yet reached. In terms of our outlook for the remainder 2016 as we head into the fourth quarter, we expect to see similar seasonal demand patterns experienced in prior years. Our discipline execution goals, continue to be focused around taking care of the customer base with the highest quality products and customer service opening up capacity to plan our future growth, drive organizational strategic agenda and utilize our capital allocation strategy to strategically grow the business, additionally, our teams align to increase customer awareness of the breath the products we can provide, expand operations in targeted regional territories and drive shareholder value by generating improved operating income, net income earnings per share and free-cash flow. We're grateful for the ongoing support that we receive from our customers, suppliers, dedicated and talented 408 plus team members, our board of directors banking partners and our shareholders who are privileged to serve. Is this partnership with all of you, that is afforded us the opportunity to strive towards our goal of providing the highest level of quality service and shareholder value over the years in the years to come. This is the end of our prepared remark, thank you for your time today, we're now ready to take questions.

[Operator Instructions] Our first question is from Scott Stember from C.L. King.

Good morning guys, thanks for the explanation on the gross margin, what happened in the quarter, it sounds as if from your commentary that some of the early returns from this capital expansion project are starting to have a positive impact on the margins, can maybe talk about what we could expect from the abate of the season, inefficiencies in the fourth quarter and then maybe just give us a broader view of maybe little more granularity about what this project will do and how will you positively impact the company over the next couple years.

Sure, Scott this is the Andy, as we kind of move into the we mentioned in our release, that in our call that we expect things to improve and we've seen some improvement already in October, we expect margins to normalize as they have in the past in the in the fourth quarter, and into the first quarter where we expect to realize some additional synergies and efficiencies. On the project overall isn't - it's a numerous facilities where we've got the highest labor content and certainly we want to be able to continue to meet capacity demand as we see you know improve growth and increased shipment opportunity in the future and so we wanted to get ahead of the game and put a strategic plan in place to be able to meet, make sure that we're ready to go in the first quarter, and so a lot of these things have taken place. We're going to be implementing over the course of the fourth quarter as well, so again I think as we look at it, in the facilities that have the higher - highest labor concentration, this initiated coupled with some workforce planning efforts that we're doing to really focus on our team members in, as well provide a better operating environment for our team members, we expect to have improving or at least offsetting if not improving opportunities for efficiency and as we head into Q1 to Q2 of next year.

Okay it sounds like some of this automation will help you, I guess handle some of the advancements and model year change over processes going forward, maybe just talk about that what you saw this year from a product standpoint it sounds as if some of the new seventeen models had some advanced requirements you guys probably weren't prepared for.

This is Andy again, it wasn't as much that the model change in the innovation caught us off guard. It was as much that an overall shipment perspective in August and September. RV shipments were up 32% and 21% respectively for those two months this year last year they were up 3% and 12%. So what we've seen is we've seen strong demand, unseasonably strong demand which is highly positive from our perspective and it wasn't that it caught us off guard. It's just that it's been very strong our team has been working incredibly hard, they've done a phenomenal job of making sure that we're taking care of the customers and we've just there was there's some additional strain on it as we moved into the third quarter. So we're well positioned to be able to handle the changing demands related to innovation in new products it's more about the strength and having capacity to be able to really be able to take advantage of opportunities like this. And so we're excited about - we're excited about what we're doing there.

Got it. And just one last question that I can jump back in the queue, on the industrial side you commented about on the residential side that you had some new regions or new areas that you moved in to just talk about that a little bit.

Sure. On the industrial side you know we're seeing single family continue to improve multifamily was down a little bit. And so we're seeing as well re model and our industrial team does a great job of adapting and moving to where the markets are the most robust, and so we kind of focused during the quarter at least in the last six months, we've kind of shifted towards the kitchen cabinet sector as we've seen improvements in single family, and as well in the remodel side so that's really where the team's been focused. We're still continuing to focus on our territories as well but it's been more about again being very strategic. And on the industrial side of the business we'll usually have puts and takes as it relates to customer gains and losses where a lot of this project related work in our industrial team again adapted very well that to be able to do offset and continue to gain share in light of kind of project work coming going.

That's all for now thanks for taking my questions and nice quarter guys.

Thank you.

Thank you.

Our next question is from Dan Moore with CJS Securities.

Good morning thanks for taking the questions. Just want to drill down a little bit further if possible on the margin and in the abatement if you will. In Q4 do you think we get back to kind of flattish to appear on your gross margin operating margins or will you expect to take a little bit more time?

We've already realized this is Andy, and we've already realized some of the efficiencies we had talked about in October and so we expected to be more normalized consistent with where we've performed in the past.

That's helpful. And in terms of the industry, you mentioned August September last year shipments are only of 3% and this year it's 20%. Are you concerned at all that perhaps some demand was pulled forward from Q4 . Or do you expect continued growth in wholesale shipments in Q4 and year-over-year basis based on what you're seeing today.

Hi Dan, this is Todd. I think I mean we've been extremely excited to see the ship and levels where they're at related to the overall OEM production, and probably more processes the ongoing retail the management extremely strong. the show seasons on one extremely well within the OE's on in September and all indications are is that you know we're preparing to satisfy the customer demand through the through the fourth quarter here and on into 2017.

Thank you Todd that was Helpful. To organic growth, I think you mentioned $33 million of revenue contributed from acquisitions was that just from the deals year-to-date just trying to get at what organic growth on the top line perspective was in the quarter.

Yes, this is Josh, Dan, The deal that was just completed in 2016 and we estimate organic growth to be flat to slightly positive, like in the prepared remarks were gaining traction on the continent with the kind of strong growth we experienced Q3 in the strength in the 5th well market.

Got it. And that feeds into my next question, Josh, we saw a really nice pickup in shipments in the fifth wheels in higher content, higher price tickets, do you think we've now lack that sort of the content thing, and as your go forward basis would we expect a much narrower gap between the growth and shipments in the travel trailers fifth wheels?

So I thought we've lacked the gap the end of - we've anniversary the mix shift. However D-contenting would be a part of that going forward, and I would if - we would expect the gap to narrow but we wouldn't say we're completely out of it with kind of the smaller D-contented units still in the marketplace, but we have a lab initial anniversary from spring of 2015.

Got it, very good, thank you.

[Operator Instruction] And we have other question from Scott Stember from C.L. King.

Could you maybe talk about some of the acquisitions that you made over the last year that's moved you into new markets, like progressive? The electronics and on the boating side, with the Control Panel, maybe just talk about what you're seeing there, opportunities for future growth in those and just generally speaking what you're seeing right now, thank you.

Sure Scott, this is Andy. We're really pleased with the acquisitions that we've done so far in 2016 and absolutely please with the acquisitions that we did in 2015 as well, we have touched in two additional markets, we've seen industrial market which is where we would categorized some of the acquisition initiatives, on the electronics side, we gained access to a number of different products and suppliers to be able to complement our adjusting R.V electronics platform. As well on the Marine side with BH electronics which has been a great acquisition for us which we recently did, it's a lots of opportunities as we talked about earlier to be able to really capitalize on the full service product line, to be able to support our customer's needs for plug and play type of scenarios, and so that's really done well, the marine market is performing well, in the relationships that we've gained from the acquisitions that we've brought on have been highly positive and solo of the team members, so all around we would categorize our acquisition efforts for 2016, consistent with where we've been in the past, but we're very pleased with what we're seeing from the acquisition side.

Got it, and then a last question, maybe just give us an idea what the acquisition pipeline looks like as we stand today?

Yes, this is Andy again. The acquisition pipeline is still very strong, we have a number of opportunities in the five line today, so again that's - we continue to look at and explore a constant stream of acquisition candidates, and so certainly from our perspective it's still going to be part of our capital allocation strategy, and again I would just categorize it as very strong.

Excellent, thanks again.

Thank you.

We have a question from Jon Evans from S.G. Capital.

Can you just talk a little bit about maybe longer term from the standpoint of operating margins, so you've grown the sales tremendously, when you guys see the company, 18 months, 24 months down the road. Can you can you give us some kind of vision on how you think or where you can progress operating margins, because it seems like the volumes continue to grow you should have some nice leverage below the gross margin line so could you just speak to that?

Sure, Jon this is Andy again, we absolutely expect to be able to take advantage of our leverage as it relates to our operating leverage and our fixed overhead, and be able to really capitalize on efficiency improvements within the organization, so in our expectations we are going to be able to continue incrementally improve operating margins as we continue to grow the business.

Okay. Then will you - I mean do you ever think about putting longer term targets of there, or is that not something you guys want to focus on.

As it relates to guidance, we feel like we are pretty comfortable with our guidance right now, so I don't expect us to be putting long term strategic guidance out there.

Okay, thank you so much.

Thank you.

[Operator Instructions] And I am showing no further questions for this time. And thank you ladies and gentlemen. I will turn it back to Julie, if you have any final remarks Julie.

Thanks, John. We appreciate everyone for being in the call today, and look forward to talking to you again on our fourth quarter 2016 conference call. A replay of today's call will be archived on Patrick's website, www.patricksind.com under Investor Relations. And I will turn the call back to our operator.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. And you may now disconnect.