Recreational vehicle and manufactured housing component maker Patrick Industries Inc. announced Jan. 11 it's paying $315 million to acquire thermoformer Sportech LLC, which makes cab components for powersports equipment and other vehicles.
The move marks Patrick’s intention to create a platform for powersports equipment the same way it did through acquisitions in the RV and marine industry processors previously.
Both Elkhart, Ind.-based Patrick and Elk River, Minn.-based Sportech have plastics capabilities, and Patrick executives said they see the acquisition helping them expand into a fragmented powersports supply chain.
It continues a string of plastics-related acquisitions for Patrick, which had $4.9 billion in revenue in 2022.
Sportech, which Patrick executives said had $255 million in 2023 sales, had estimated thermoforming sales of $110 million in 2022, with two manufacturing plants and nine lines, according to the 2023 Plastics News North American thermoformers sales ranking.
Patrick had an estimated $20 million in North American thermoforming sales in 2022.
In addition to offering opportunities to grow existing markets, Patrick executives pointed to benefits of combining the two manufacturing platforms.
"We believe numerous synergies exist between Sportech and Patrick that we can begin to unlock in the next 12 to 18 months," said Kip Ellis, Patrick's chief operating officer and executive vice president of operations, in a Jan. 11 call with analysts to discuss the acquisition.
"These include, but are not limited to, complementary manufacturing and forming capabilities, our plastics and metal fabrication capabilities, tube bending specialties and over $100 million in similar-sourced materials, including metals, plastics [and] polycarbonates, amongst others," he said. "Sportech helps to solidify our platform for future organic and strategic growth within the powersports market and in tandem with our industry-leading platforms in the RV and marine markets, [and] enables us to accelerate our momentum in the attractive outdoor enthusiast space."
Sportech, which specializes in designing and manufacturing cab components for outdoor recreation vehicles, golf carts and industrial and agricultural vehicles, had compound annual growth of 17 percent over the last five years, Patrick said.
The company was founded 30 years ago as a maker of snowmobile windshields and has more than 400 employees today, Ellis said.
Sportech had an estimated $41 million in adjusted earnings before interest, taxes, depreciation and amortization in 2023, Patrick said.
Patrick executives said they see the Sportech purchase leading to more acquisition opportunities in the supply chains for powersports equipment manufacturing.
"From an M&A standpoint, much like what we looked at with the RV space years ago and what we've done more recently in the marine space, it's a fragmented supply base," Ellis said. "It's one that we look to Sportech as a foundational platform for us."
He said the Sportech acquisition will give Patrick close to $500 million in sales in the powersports segment.
"We feel like we have the heft and a presence in the market," he said.
Patrick has made other acquisitions in plastics.
In 2021, for example, it bought injection molder Sea-Lect Plastics in Everett, Wash.; Alpha Systems, an Elkhart, Ind.-based company that made thermoplastic polyolefin roofs for RVs as well as other plastic components; and Hyperform Inc., a maker of plastic foam flooring for boats.
Patrick CEO Andy Nemeth suggested to analysts on the Jan. 11 call that the company will be looking for more acquisitions.
"We're in a position to be on offense right now as we look to the future," Nemeth said. "While the markets are calibrating, we're in an opportunity position to be able to take advantage of great deals like this and great companies like this. … We're going to continue to cultivate the acquisition pipeline."