PATK 10-K & 10-Q changes, risk factors and insider trading
Patrick Industries Inc. · Nasdaq · Motor Vehicle Parts & Accessories · CIK 76605 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
“In addition, if any of our suppliers seek bankruptcy relief or otherwise cannot continue their business as anticipated, the availability or price of these requirements could be adversely affected. A global economic downturn and related market uncertainty could negatively impact the availability of materials from one or more of these sources of these materials, especially during times such as we have recently seen when there are supplier constraints based on labor and other actions due to pandemic. …”see in full comparison
Generally, our raw materials, supplies and energy requirements are obtained from various sources. These purchases include unformed materials and rough and finished parts. We are reliant on our extended supply chain and any disruption in this supply chain could have an adverse impact on our ability to deliver products to our customers on a timely and cost-effective basis. While alternative sources are available, our business would be materially adversely affected if we are unable to find alternative sources on a timely and cost-effective basis. A reduction or interruption in supply; a significant increase in the price of one or more materials; a failure to adequately authorize procurement of inventory by our manufacturers; or a failure to appropriately cancel, reschedule, or adjust our requirements based on our business and customer needs; could materially adversely affect our business, operating results, and financial condition and could materially damage customer relationships. If there are shortages of materials we need to manufacture our products, the price of these materials may increase, or these materials may not be available at all, and we may also encounter shortages if we do not accurately anticipate our needs. We may not be able to secure enough materials at reasonable prices or of acceptable quality to build new products in a timely manner in the quantities or configurations needed. Accordingly, our revenue and gross margins could suffer until other sources can be developed. Our operating results would also be adversely affected if, anticipating greater demand than actually develops, we commit to the purchase of more materials than we need, which is more likely to occur in a period of demand uncertainties such as we are currently experiencing. There can be no assurance that we will not encounter these problems in the future.see in full comparisonIn addition, if any of our suppliers seek bankruptcy relief or otherwise cannot continue their business as anticipated, the availability or price of these requirements could be adversely affected. A global economic downturn and related market uncertainty could negatively impact the availability of materials from one or more of these sources of these materials, especially during times such as we have recently seen when there are supplier constraints based on labor and other actions due to pandemic. We may not be able to diversify sources in a timely manner, which could harm our ability to deliver products to customers and seriously impact present and future sales. In addition, when facing component supply-related challenges, we have increased our efforts in procuring materials in order to meet customer expectations which in turn contribute to an increase in purchase commitments. Increases in our purchase commitments to shorten lead times could also lead to excess and obsolete inventory charges if the demand for our products is less than our expectations. If we fail to anticipate customer demand properly, an oversupply of parts could result in excess or obsolete components that could adversely affect our gross margins.
There are risks inherent to importing our products. Virtually all of our imported products are subject to duties which may impact the cost of such products. In addition, countries to which we ship our products may impose safeguard quotas to limit the quantity of products that may be imported. We rely on free trade agreements and other supply chain initiatives in order to maximize efficiencies relating to product importation.see in full comparisonFor example, we have historically received benefits from duty-free imports on certain products from certain countries pursuant to the Generalized System of Preferences ("GSP") program. Although there appears to be continued bipartisan support of the GSP program, the provisions have not been renewed since they expired on December 31, 2020. If the GSP program is not renewed or otherwise made retroactive, we would recognize significant additional duties, and profitability could be negatively impacted.The United States has imposed tariffs and export controls on certain goods and products imported from China, Vietnam, Indonesia, Malaysia, Mexico, Canada and certain other countries, such as plywood, which has resulted in retaliatory tariffs by China and other countries and additional tariffs may be imposed by the current U.S. administration on products imported from China, Vietnam, Indonesia, Malaysia, Mexico and Canada. Additional tariffs imposed by the United States on a broader range of imports, or further retaliatory trade measures taken by China or other countries in response, could result in an increase in supply chain costs that we may not be able to offset or that may otherwise adversely impact our results of operations. Additionally, we are subject to government regulations relating to importation activities, including related to U.S. Customs and Border Protection ("CBP") withhold release orders. The imposition of taxes, duties and quotas, the withdrawal from or material modification to trade agreements, and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on our business, results of operations and financial condition. If additional tariffs or trade restrictions are implemented by the U.S. or other countries, the cost of our products could increase which could adversely affect our business.
In the event the conditional conversion feature of the 1.75% Convertible Senior Notes due 2028 (the "1.75% Convertible Notes") is triggered, holders of the 1.75% Convertible Notes will be entitled to convert the 1.75% Convertible Notes at any time during specified periods at their option. This conditional conversion feature is triggered for a given calendar quarter if the last reported price of our common stock is more than or equal to 130% of the conversion price for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter. Because this condition was satisfied during the calendar quarter ended December 31,see in full comparison2024,2025, the conditional conversion feature was triggered as of December 31,20242025 and the 1.75% Convertible Notes are convertible, in whole or in part, at the option of the holders from January 1,20252026 to March 31,2025.2026. The 1.75% Convertible Notes were also convertible in each calendar quarter beginning with the quarter ended December 31, 2024 based on satisfying this condition in the prior calendar quarter. Whether the 1.75% Convertible Notes will be convertible in subsequent periods will depend on the continued satisfaction of this condition or another conversion condition in the future. If one or more holders elect to convert their 1.75% Convertible Notes, we would be required to settle our conversion obligation equal to the aggregate principal amount of such converted notes through the payment of cash, which could adversely affect our liquidity. See Notes 7 "Debt" and 9 "Derivative Financial Instruments" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for additional details.
Full comparison: every changed paragraph (7)
We are currently experiencing inflationary pressures on our operating costs. The prices of key raw materials, consisting primarily of lauan, gypsum, fiberglass, particleboard, aluminum, softwoods and hardwoods lumber, resin, and petroleum-based products, are influenced by supply and demand and other factors specific to these commodities as well as general inflationary pressures, including those driven by supply chain and logistical disruptions. Pricing and availability of finished goods, raw materials, energy, transportation and other necessary supplies and services for use in the Company’s businesses can be volatile due to numerous factors beyond its control, including general, domestic and international economic conditions, natural disasters, labor costs, production levels, competition, consumer demand, import duties and tariffs, currency exchange rates, international treaties, and changes in laws, regulations, and related interpretations. Evolving trade policies could continue to make sourcing products from foreign countries difficult and costly, as the Company sources a significant amount of its products from outside of the United States including from China, MexicoMexico, Canada, Indonesia, Malaysia and CanadaVietnam which may be subject to additional tariffs imposed by the current U.S. administration.
Generally, our raw materials, supplies and energy requirements are obtained from various sources. These purchases include unformed materials and rough and finished parts. We are reliant on our extended supply chain and any disruption in this supply chain could have an adverse impact on our ability to deliver products to our customers on a timely and cost-effective basis. While alternative sources are available, our business would be materially adversely affected if we are unable to find alternative sources on a timely and cost-effective basis. A reduction or interruption in supply; a significant increase in the price of one or more materials; a failure to adequately authorize procurement of inventory by our manufacturers; or a failure to appropriately cancel, reschedule, or adjust our requirements based on our business and customer needs; could materially adversely affect our business, operating results, and financial condition and could materially damage customer relationships. If there are shortages of materials we need to manufacture our products, the price of these materials may increase, or these materials may not be available at all, and we may also encounter shortages if we do not accurately anticipate our needs. We may not be able to secure enough materials at reasonable prices or of acceptable quality to build new products in a timely manner in the quantities or configurations needed. Accordingly, our revenue and gross margins could suffer until other sources can be developed. Our operating results would also be adversely affected if, anticipating greater demand than actually develops, we commit to the purchase of more materials than we need, which is more likely to occur in a period of demand uncertainties such as we are currently experiencing. There can be no assurance that we will not encounter these problems in the future. In addition, if any of our suppliers seek bankruptcy relief or otherwise cannot continue their business as anticipated, the availability or price of these requirements could be adversely affected. A global economic downturn and related market uncertainty could negatively impact the availability of materials from one or more of these sources of these materials, especially during times such as we have recently seen when there are supplier constraints based on labor and other actions due to pandemic. We may not be able to diversify sources in a timely manner, which could harm our ability to deliver products to customers and seriously impact present and future sales. In addition, when facing component supply-related challenges, we have increased our efforts in procuring materials in order to meet customer expectations which in turn contribute to an increase in purchase commitments. Increases in our purchase commitments to shorten lead times could also lead to excess and obsolete inventory charges if the demand for our products is less than our expectations. If we fail to anticipate customer demand properly, an oversupply of parts could result in excess or obsolete components that could adversely affect our gross margins.
In addition, if any of our suppliers seek bankruptcy relief or otherwise cannot continue their business as anticipated, the availability or price of these requirements could be adversely affected. A global economic downturn and related market uncertainty could negatively impact the availability of materials from one or more of these sources of these materials, especially during times such as we have recently seen when there are supplier constraints based on labor and other actions due to pandemic. We may not be able to diversify sources in a timely manner, which could harm our ability to deliver products to customers and seriously impact present and future sales. In addition, when facing component supply-related challenges, we have increased our efforts in procuring materials in order to meet customer expectations which in turn contribute to an increase in purchase commitments. Increases in our purchase commitments to shorten lead times could also lead to excess and obsolete inventory charges if the demand for our products is less than our expectations. If we fail to anticipate customer demand properly, an oversupply of parts could result in excess or obsolete components that could adversely affect our gross margins.
We purchase a material portion of our raw materials and other supplies from suppliers located in Indonesia, China, Vietnam, Malaysia, Mexico and Canada. As a result, our ability to obtain raw materials and supplies on favorable terms and in a timely fashion are subject to a variety of risks, including fluctuations in foreign currencies, changes in the economic strength of the foreign countries in which we do business, difficulties in enforcing contractual obligations and intellectual property rights, compliance burdens associated with a wide variety of international and U.S. import laws, and social, political, and economic instability. Our business with our international suppliers could be adversely affected by restrictions on travel to and from any of the countries in which we do business due to a health epidemic, pandemic outbreak, or other event. Additional risks associated with our foreign business include restrictive trade policies, imposition of duties, taxes, or government royalties by foreign governments, imposition of tariffs by the United States on products we import from certain countries, and compliance with the Foreign Corrupt Practices Act and local anti-bribery laws. Any measures, or proposals to implement such measures, could negatively impact our relations with our international suppliers and the volume of shipments to the U.S. from these countries, which could have a materially adverse effect on our business and operating results. We maintain limited operations in Mexico, China and Canada but are nevertheless exposed to risks of operating in those countries associated with: (i) the difficulties and costs of complying with a wide variety of complex laws, treaties and regulations; (ii) unexpected changes in political or regulatory environments; (iii) earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs, exchange controls, or other restrictions; (iv) political, economic, and social instability; (v) import and export restrictions and other trade barriers; (vi) responding to disruptions in existing trade agreements or increased trade tensions between countries or political or economic unions; (vii) maintaining overseas subsidiaries and managing international operations; and (viii) fluctuations in foreign currency exchange rates.
There are risks inherent to importing our products. Virtually all of our imported products are subject to duties which may impact the cost of such products. In addition, countries to which we ship our products may impose safeguard quotas to limit the quantity of products that may be imported. We rely on free trade agreements and other supply chain initiatives in order to maximize efficiencies relating to product importation. For example, we have historically received benefits from duty-free imports on certain products from certain countries pursuant to the Generalized System of Preferences ("GSP") program. Although there appears to be continued bipartisan support of the GSP program, the provisions have not been renewed since they expired on December 31, 2020. If the GSP program is not renewed or otherwise made retroactive, we would recognize significant additional duties, and profitability could be negatively impacted. The United States has imposed tariffs and export controls on certain goods and products imported from China, Vietnam, Indonesia, Malaysia, Mexico, Canada and certain other countries, such as plywood, which has resulted in retaliatory tariffs by China and other countries and additional tariffs may be imposed by the current U.S. administration on products imported from China, Vietnam, Indonesia, Malaysia, Mexico and Canada. Additional tariffs imposed by the United States on a broader range of imports, or further retaliatory trade measures taken by China or other countries in response, could result in an increase in supply chain costs that we may not be able to offset or that may otherwise adversely impact our results of operations. Additionally, we are subject to government regulations relating to importation activities, including related to U.S. Customs and Border Protection ("CBP") withhold release orders. The imposition of taxes, duties and quotas, the withdrawal from or material modification to trade agreements, and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on our business, results of operations and financial condition. If additional tariffs or trade restrictions are implemented by the U.S. or other countries, the cost of our products could increase which could adversely affect our business.
We depend on our cash balances, our cash flows from operations, our 2024 Credit Facility and other financing vehicles to finance our operating requirements, capital expenditures and other needs. If a material economic recession occurred, such as the recession that impacted the economy in 2007-2010, production of RVs, powersports, marine units and manufactured homes could decline materially, resulting in reduced demand for our products. A decline in our operating results could negatively impact our liquidity. If our cash balances, cash flows from operations, and availability under our 2024 Credit Facility are insufficient to finance our operations and alternative capital is not available, we may not be able to expand our business and make acquisitions, or we may need to curtail or limit our existing operations.
In the event the conditional conversion feature of the 1.75% Convertible Senior Notes due 2028 (the "1.75% Convertible Notes") is triggered, holders of the 1.75% Convertible Notes will be entitled to convert the 1.75% Convertible Notes at any time during specified periods at their option. This conditional conversion feature is triggered for a given calendar quarter if the last reported price of our common stock is more than or equal to 130% of the conversion price for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter. Because this condition was satisfied during the calendar quarter ended December 31, 2024,2025, the conditional conversion feature was triggered as of December 31, 20242025 and the 1.75% Convertible Notes are convertible, in whole or in part, at the option of the holders from January 1, 20252026 to March 31, 2025.2026. The 1.75% Convertible Notes were also convertible in each calendar quarter beginning with the quarter ended December 31, 2024 based on satisfying this condition in the prior calendar quarter. Whether the 1.75% Convertible Notes will be convertible in subsequent periods will depend on the continued satisfaction of this condition or another conversion condition in the future. If one or more holders elect to convert their 1.75% Convertible Notes, we would be required to settle our conversion obligation equal to the aggregate principal amount of such converted notes through the payment of cash, which could adversely affect our liquidity. See Notes 7 "Debt" and 9 "Derivative Financial Instruments" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for additional details.
Management's Discussion & Analysis (MD&A)
Removed heading “Year Ended December 31, 2024 Compared to 2023”
Removed heading “Investing Activities”
Removed heading “Financing Activities”
Largest changes
“The Company’s products for this market are sold primarily to major manufacturers of manufactured homes, other OEMs, and to a lesser extent, manufacturers in adjacent industries. Factors that may favorably impact demand in this industry include jobs growth, consumer confidence, favorable changes in financing regulations, a narrowing in the difference between interest rates on MH loans and mortgages on traditional residential "site-built" housing, and any improvement in conditions in the asset-backed securities markets for manufactured housing loans.”see in full comparison
Interest Expense, Net. Interest expense, net,see in full comparisonincreaseddecreased$10.5$5.0 million, or15%,6%, to $74.5 million in 2025 compared to $79.5 million in20242024. The decrease primarily reflects a lower average interest rate on our outstanding debt compared to$68.9 million in 2023. The increase primarily reflects interest associated withtheissuancepriorofyearour 6.375% Senior Notes due 2032 (the “6.375% Senior Notes”) in October 2024, higher debt levels and higher interest rates on our term loan and revolver balances.period.
Cost of goods sold as a percentage of net salessee in full comparisonincreaseddecreased in20242025 compared to20232024 primarily as a result of continued cost reduction and automation initiatives we deployed throughout 2024 and into 2025 that had a50-basispositive impact on labor and overhead costs. The decrease in cost of goods sold as a percentage of net sales in 2025 reflects a 50 basis pointincreasedecrease in labor and 20 basis point decrease in overhead as a percentage of netsales due to higher research and development costs,sales, partially offset by a40-basis10 basis pointdecreaseincrease inlabormaterial as a percentage of net sales. In general, the Company's cost of goods sold percentage can be impacted from period-to-period by demand changes in certain market sectors that can result in fluctuating costs of certain raw materials and commodity-based components that are utilized in production.
Full comparison: every changed paragraph (51)
The Company’s RV products are sold primarily to major manufacturers of RVs, smaller original equipment manufacturers ("OEMs"), and to a lesser extent, manufacturers in adjacent industries. The principal types of recreational vehicles include (1) towables: conventional travel trailers, fifth wheels, folding camping trailers, and truck campers; and (2) motorized: class A (large motor homes), class B (van campers), and class C (small-to-mid size motor homes).
The RV industry is our primary market and comprised 44%45% and 43%44% of the Company’s consolidated net sales for the years ended December 31, 20242025 and 2023,2024, respectively. Net sales to the RV industry increased 8%9% for the year ended December 31, 20242025 compared to 2023.2024. Following a dealer inventory restocking in the first half of 2024, OEMs reduced production levels slightly in the second half of 2024the year as dealers actively managed inventory levels as retail demand decreased,softened. In 2025, dealer inventory dynamics continued to normalize, with dealersinventory managingreductions moderating as dealer inventory levels andmoved the OEMs demonstrating operating disciplinecloser to maintaintargeted a balanced inventory channel for the long-term health and stability of the industry.levels.
According to the RV Industry Association (“RVIA”), RV industry wholesale unit shipments totaled approximately 333,700342,200 units in 2024,2025, an increase of 7%3% fromcompared to approximately 313,200333,700 units in 2023.2024. According to Company estimates based on data from Statistical Surveys, Inc. ("SSI"), RV industry retail unit sales totaled approximately 352,700348,700 units in 2024,2025, a decrease of 7%2% fromcompared to approximately 380,700354,400 units in 2023.2024.
The Company’s sales to the marine industry are primarily focused on the powerboat sector of the market which is comprised of four main categories: fiberglass, aluminum fishing, pontoon and ski & wake.
Net sales to the marine industry comprised approximately 15% and 23% of the Company's consolidated net sales for each of the years ended December 31, 20242025 and 2023, respectively.2024. Net sales to the marine industry in the year ended December 31, 20242025 decreasedincreased 27%6% compared to 2023. The decrease in net sales to the marine industry was in line with the decrease in wholesale powerboat unit shipments.2024.
Our marine revenue is generally correlated to marine wholesale powerboat unit shipments. According to Company estimates based on data published by the National Marine Manufacturers Association ("NMMA"), wholesale powerboat unit shipments totaled approximately 143,900140,100 units in 2024,2025, a decrease of 25%4% compared to 192,300146,000 units in 2023.2024. According to SSI, we estimate marine retail powerboat shipments totaled approximately 165,000152,300 units in 2024,2025, a decrease of 8% fromcompared to approximately 179,500165,200 units in 2023.2024.
Through acquisitions completed in recent years, the Company entered the powersports end market. Powersports is a category of motorsports which includes vehicles such as motorcycles, all-terrain vehicles ("ATVs"), side-by-sides, snowmobiles, scooters, golf carts and other personal transportation vehicles, and other related categories. Our powersports business is primarily focused on the utility and premium segments of the side-by-side market, which have been outperforming the more discretionary recreational segment. We also participate in the motorcycle and golf cart segments of the market. OEMs and dealers are actively managing field inventory levels to align dealer inventories with retail demand.
Through acquisitions completed in recent years, the Company entered the powersports end market. Previously, our sales to the powersports end market were included in the Company’s marine end market sales. Effective with the first quarter of 2024, powersports net sales are being reported separately after the January 2024 acquisition of Sportech, LLC (“Sportech”), as disclosed in Note 2 "Revenue Recognition" of the Notes to Consolidated Financial Statements included herein.
Net sales to the powersports industry comprised approximately 10% and 4% of the Company's consolidated net sales for each of the years ended December 31, 20242025 and 2023, respectively.2024. Net sales to the powersports industry increased 189%9% during the year ended December 31, 20242025 compared to 2023. The increase in net sales for this period is primarily attributable to the Company's acquisition of Sportech in January 2024.
The Company’s products for this market are sold primarily to major manufacturers of manufactured homes, other OEMs, and to a lesser extent, manufacturers in adjacent industries. Factors that may favorably impact demand in this industry include jobs growth, consumer confidence, favorable changes in financing regulations, a narrowing in the difference between interest rates on MH loans and mortgages on traditional residential "site-built" housing, and any improvement in conditions in the asset-backed securities markets for manufactured housing loans.
Net sales to the MH industry comprised approximately 18%17% and 16%18% of the Company's consolidated net sales for the years ended December 31, 20242025 and 2023,2024, respectively. Net sales to the MH industry increaseddecreased 20%less than 1% during the year ended December 31, 20242025 compared to 2023.2024. MH sales are generally correlated to MH industry wholesale unit shipments. According to Company estimates basedBased on industry data from the Manufactured Housing Institute, MH industry wholesale unit shipments totaled 102,700 units in 2025, a decrease of 1% compared to approximately 103,300 units in 2024, an increase of 16% compared to 89,200 units in 2023, primarily driven by OEMs increasing production from significantly reduced levels in 2023 in anticipation of a recovery in demand.2024.
The industrial market is comprised primarily of U.S. residential housing market and non-housing market categories and includes kitchen cabinet, countertop, hospitality, retail and commercial fixtures, and office and household furniture markets and regional distributors.
The industrial market is comprised primarily of kitchen cabinet, countertop, hospitality, retail and commercial fixtures, and office and household furniture markets and regional distributors. Net sales to the industrial market comprised approximately 13% and 14% of the Company's consolidated net sales forin theboth years ended December 31, 20242025 and 2023, respectively.2024. Net sales to the industrial market decreasedincreased 1%4% during the year ended December 31, 20242025 compared to 2023.2024. Overall, our revenues in these markets are focused on residential and multifamily housing, hospitality, high-rise housing and office, commercial construction andconstruction, institutional furniture markets. We estimate that approximately 75% to 85% of our industrial business is directly tied to the residential housing market, with the remaining industrial sales tied to the non-residentialmarkets and commercialother markets.non-housing categories.
During the year ended December 31, 2024,2025, combined new housing starts decreased 4%2% compared to 2023,2024, reflecting a decrease in multifamilysingle-family housing starts of 25%,7%, partially offset by an increase in single-familymultifamily housing starts of 6%.12%. Our industrial products are generally among the last components installed in new unit construction and as such our related sales typically trail new housing starts by four to six months.
Net Sales. Net sales in 20242025 increased approximately $247.6$235.1 million, or 7%,6%, to $3.95 billion compared to $3.72 billion compared to $3.47 billion in 2023.2024. Net sales in 20242025 increased due to increased sales to the powersports,RV, RVmarine, powersports and MHindustrial markets, partially offset by decreased sales to the marineMH and industrial markets. The Company's sales to the powersports market increased $230.3 million, or 189%, in 2024 compared to 2023, primarily attributable to the Company’s acquisition of Sportech in the first quarter of 2024.market. Sales to the RV market increased $121.9$150.9 million, or 8%,9%, to $1.78 billion in 2025 compared to $1.63 billion in 20242024, compared to $1.50 billion in 2023,primarily due to industry volume growth and the Company’s acquisition of ICON Direct LLCLLC, which doesdoing business as RecPro (“RecPro”) in the third quarter of 2024. Sales to the MHmarine market increased $113.9$35.7 million, or 20%,6%, to $682.1$606.4 million in 20242025 compared to $568.2 million in 2023, primarily due to an increase in estimated MH industry wholesale unit shipments of approximately 16%. Sales to the marine market decreased $211.9 million, or 27%, to $570.7 million in 2024 compared to $782.6 million in 20232024, primarily attributable to acquisitions completed in 2025, partially offset by a decrease in estimated powerboat wholesale unit shipments of 25%4% compared to 2023.2024. The Company's sales to the powersports market increased $31.9 million, or 9%, in 2025 compared to 2024, primarily attributable to the continued growth of Patrick's attachment rates on premium utility vehicles and a recovery in utility vehicle wholesale unit shipments. Sales to the industrial market decreasedincreased $6.5$17.2 million, or 1%,4%, in 2025 compared to 2023.2024, primarily attributable to market share gains and product mix shifts by certain customers. Sales to the MH market decreased $0.6 million, or less than 1%, to $681.5 million in 2025 compared to $682.1 million in 2024, due to a decrease in MH industry wholesale unit shipments of 1% compared to 2024.
Cost of Goods Sold. Cost of goods sold increased $194.0$158.1 million, or 7%,5%, to $3.04 billion in 2025 compared to $2.88 billion in 2024 compared to $2.69 billion in 2023.2024. As a percentage of net sales, cost of goods sold increaseddecreased 10-basis60 basis points during 20242025 to 76.9% compared to 77.5% compared to 77.4% in 2023.2024.
Cost of goods sold as a percentage of net sales increaseddecreased in 20242025 compared to 20232024 primarily as a result of continued cost reduction and automation initiatives we deployed throughout 2024 and into 2025 that had a 50-basispositive impact on labor and overhead costs. The decrease in cost of goods sold as a percentage of net sales in 2025 reflects a 50 basis point increasedecrease in labor and 20 basis point decrease in overhead as a percentage of net sales due to higher research and development costs,sales, partially offset by a 40-basis10 basis point decreaseincrease in labormaterial as a percentage of net sales. In general, the Company's cost of goods sold percentage can be impacted from period-to-period by demand changes in certain market sectors that can result in fluctuating costs of certain raw materials and commodity-based components that are utilized in production.
Gross Profit. Gross profit increased $53.7$77.0 million or 7%,9%, to $912.9 million in 2025 compared to $835.9 million in 2024 compared to $782.2 million in 2023.2024. As a percentage of net sales, gross profit decreasedincreased 60 basis points to 23.1% in 2025 compared to 22.5% in 2024 compared to 22.6% in 2023.2024. The decreaseincrease in gross profit as a percentage of net sales in 20242025 compared to 20232024 reflects the impact of the factors discussed above under “Cost of Goods Sold”.
The increase in warehouse and delivery expenses in 20242025 compared to 20232024 is primarily attributable to the increase in sales, and the increase as a percentage of net sales is primarily related to anhigher increasefreight in certain expenses that are fixed in nature, including fleet and insurance expenses.costs.
Selling, General and Administrative ("SG&A") Expenses. SG&A expenses increased $26.3$35.8 million, or 9%,11%, to $361.6 million in 2025 compared to $325.8 million in 2024 compared to $299.4 million in 2023.2024. As a percentage of net sales, SG&A expenses wereincreased 40 basis points to 9.2% in 2025 compared to 8.8% in 2024 and 8.6% in 2023.2024.
The increase in SG&A expenses in 20242025 compared to 20232024 is primarily due to the cost profile of certain 2024 acquisitions, increased wages, $5.0incentive millioncompensation, selling expenses, technology expenses, and loss on sales of transaction costs associated with the acquisition of Sportech, increased technology expenses and the $2.5 million write-off of deferred financing costs due to early payment debt,assets, partially offset by decreased incentiveprofessional compensation and insurance expenses.fees.
The increase in SG&A expenses as a percentage of net sales in 20242025 compared to 20232024 is primarily attributabledue to theincreased Sportechincentive acquisition-relatedcompensation, costs,selling increasedexpenses, technology expensesexpenses, and deferredloss financingon costssales write-offof mentioned above,assets, partially offset by decreased incentiveprofessional compensation, wages and insurance expenses. Additionally, certain 2023 and 2024 acquisitions operate with comparatively higher SG&A as a percentage of sales when compared to the consolidated percentage.fees.
Amortization of Intangible Assets. Amortization of intangible assets increased $17.6$1.0 million, or 22%,1%, in 20242025 compared to 2023.2024. The increase in 20242025 compared to 20232024 primarily reflectreflects the impact of the SportechRecPro acquisition as well as other acquisitions completed in 20242025 and 2023.2024.
Operating Income. Operating income decreasedincreased $2.2$17.9 million, or 1%,7%, to $276.0 million in 2025 compared to $258.0 million in 2024 compared to $260.2 million in 2023. Operating income in 2024 and 2023 included $47.2 million and $1.0 million, respectively, from the businesses acquired in each respective year.2024. Operating income as a percentage of net sales decreasedincreased 6010 basis points to 6.9%7.0% in 20242025 compared to 7.5%6.9% in 2023. The decrease in operating income as a percentage of net sales is primarily attributable to the items discussed above.2024.
Operating income in 2025 and 2024 included $1.3 million and $47.2 million, respectively, from the businesses acquired in each respective year. The increase in operating income and operating income as a percentage of net sales is primarily attributable to the items discussed above.
Interest Expense, Net. Interest expense, net, increaseddecreased $10.5$5.0 million, or 15%,6%, to $74.5 million in 2025 compared to $79.5 million in 20242024. The decrease primarily reflects a lower average interest rate on our outstanding debt compared to $68.9 million in 2023. The increase primarily reflects interest associated with the issuanceprior ofyear our 6.375% Senior Notes due 2032 (the “6.375% Senior Notes”) in October 2024, higher debt levels and higher interest rates on our term loan and revolver balances.period.
Other Expenses. Other expenses were $24.4 million in 2025 compared to zero in the prior year period, reflecting expenses related to a legal settlement.
Income Taxes. Income tax expense decreasedincreased $8.2$1.8 million, or 17%,5%, to $42.0 million in 2025 compared to $40.2 million in 20242024. comparedThis toincrease $48.4primarily millionreflects inan 2023 as a result of the decrease in pre-tax income and a decreaseincrease in the effective tax rate. For 2024, the effective tax rate wasto 22.5%23.7% in 2025 compared to 25.3%22.5% in 2023.2024, partially offset by a decrease in income before taxes of $1.5 million. The decreaseincrease in the effective tax rate in 2025 compared to 2024 is primarily related to increaseddecreased excess tax benefits on share-based compensation.
The Company's reportable segments, manufacturing and distribution, are based on its method of internal reporting. The Company regularly evaluates the performance of the manufacturing and distribution segments and allocates resources to them based on a variety of indicators including net salessales, gross profit and operating income. The Company does not measure profitability at the end market (RV, marine, powersports, MH and industrial) level. See NotesNote 17 "Segment Information" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for additional details.
Sales. Manufacturing segment sales increased $103.2$202.4 million, or 4%,7%, to $2.96 billion in 2025 compared to $2.76 billion in 2024 compared to $2.65 billion in 2023.2024. The manufacturing segment accounted for approximately 74% of the Company’s consolidated net sales infor 2024 compared to approximately 75%each of the Company'syears consolidatedended netDecember sales31, in2025 2023.and 2024.
Manufacturing segment sales in 2025 compared to 2024 increased due to increased sales to the RV, marine, powersports and industrial markets, partially offset by decreased sales to the MH market. Sales to the RV market increased $125.0 million, or 11%, compared to 2024, due to an increase in estimated wholesale units of 3% compared to 2024. Sales to the marine market increased $36.0 million, or 7%, compared to 2024, primarily attributable to acquisitions completed in 2025. Sales to the powersports market increased $28.8 million, or 9%, in 2025 compared to 2024, primarily attributable to the continued growth of Patrick's attachment rates on premium utility vehicles and a recovery in utility vehicle wholesale unit shipments. Sales to the industrial market increased $13.5 million, or 3%, compared to 2024, primarily due to market share gains and product mix shifts of certain customers. Sales to the MH market decreased $1.8 million, or 1%, compared to 2024.
Manufacturing segment sales in 2024 compared to 2023 increased due to increased sales to the powersports, MH and RV markets, partially offset by decreased sales to the marine and industrial markets. Sales to the powersports market increased 210% in 2024 compared to 2023, primarily attributable to the Company’s acquisition of Sportech in the first quarter of 2024. Sales to the MH market increased 16% compared to 2023, primarily due to an increase in estimated MH industry wholesale unit shipments of approximately 16%. Sales to the RV market increased 10% compared to 2023, due to industry volume growth. Sales to the marine market decreased 29% compared to 2023, primarily attributable to a decrease in estimated powerboat wholesale unit shipments of 25%. Sales to the industrial market decreased 2% compared to 2023.
Gross Profit. Manufacturing segment gross profit increased $35.3$43.6 million, or 6%,7%, to $656.2 million in 2025 compared to $612.6 million in 2024 compared to $577.3 million in 2023.2024. As a percentage of sales, gross profit increased 40 basis points towas 22.2% in 2024both compared2025 toand 21.8% in 2023.2024. The increase in manufacturing gross profit as a percentage of sales in 2024 compared to 2023 is attributable to decreases in material and labor costs as a percentage of sales, partially offset by increased overhead costs as a percentage of sales.
Operating Income. Manufacturing segment operating income increased $17.1 million, or 5%, to $358.0 million in 2025 compared to $341.0 million in 2024. As a percentage of sales, operating income decreased 30 basis points to 12.1% in 2025 compared to 12.4% in 2024. The increase in operating income is attributable to increased sales. The decrease to operating income as a percentage of sales is primarily related to an increase in selling, general and administrative expenses as a percentage of sales.
Manufacturing segment operating income in 2025 attributable to acquisitions completed during the year was approximately $1.3 million compared to manufacturing segment operating income of $46.5 million in 2024 attributable to acquisitions completed during that year.
Operating Income. Manufacturing segment operating income increased $19.9 million, or 6%, to $341.0 million in 2024 compared to $321.1 million in 2023. Manufacturing segment operating income in 2024 attributable to acquisitions completed in such year was approximately $46.5 million and manufacturing segment operating loss in 2023 attributable to acquisitions completed in such year was $(0.6) million. The increase in operating income in 2024 primarily reflects the items discussed above.
Sales. Distribution segment sales increased $90.7$34.2 million, or 10%,3%, to $1.01 billion in 2025 compared to $980.1 million in 2024 compared to $889.4 million in 2023.2024. The distribution segment accounted for approximately 26% of the Company’s consolidated net sales for 2024 compared to 25%each of the Company'syears consolidatedended netDecember sales31, in2025 2023.and 2024.
Distribution segment sales in 2025 compared to 2024 increased due to increased sales to the RV, industrial, powersports and MH markets, partially offset by decreased sales to the marine market. Sales to the RV market increased $25.9 million, or 5%, compared to 2024, primarily attributable to the Company’s acquisition of RecPro in the third quarter of 2024. Sales to the industrial market increased $3.7 million, or 10%, compared to 2024, primarily due to market share gains and product mix shifts by certain customers. Sales to the powersports market increased $3.1 million, or 23%, compared to 2024, primarily attributable to the continued growth of Patrick's attachment rates on premium utility vehicles and a recovery in utility vehicle wholesale unit shipments. Sales to the MH market increased $1.2 million, or less than 1%, compared to 2024. Sales to the marine market decreased $0.3 million, or 1%, compared to 2024.
Distribution segment sales in 2024 compared to 2023 increased due to increased sales to all five of our end markets. Sales to the MH market increased 23% compared to 2023, primarily due to an increase in estimated MH industry wholesale unit shipments of approximately 16%. Sales to the powersports market increased 6% compared to 2023, primarily attributable to product mix shifts by certain customers. Sales to the RV market increased 4% compared to 2023, primarily attributable to the Company’s acquisition of RecPro in the third quarter of 2024. Sales to the marine market increased 3% compared to 2023. Sales to the industrial market increased 2% compared to 2023, primarily reflecting product mix shifts by certain customers.
For 2024 and 2023,2024, distribution segment sales attributable to acquisitions completed in each of those years2024 were $20.3 million and $14.1 million, respectively.million.
Gross Profit. Distribution segment gross profit increased $29.4$26.6 million, or 15%,12%, to $251.4 million in 2025 compared to $224.9 million in 2024 compared to $195.5 million in 2023.2024. As a percentage of sales, gross profit increased 90190 basis points 22.9%to 24.8% in 20242025 compared to 22.0%22.9% in 2023.2024. The increase in manufacturing gross profit is attributable to increased sales. The increase to gross profit as a percentage of net sales for 2024 is primarily attributedattributable to decreasesdecreased in materiallabor and labormaterial costs as a percentage of net sales.
Operating Income. Distribution segment operating income increaseddecreased $14.6$1.7 million, or 16%,2%, to $103.0 million in 2025 compared to $104.7 million in 20242024. As a percentage of sales, operating income decreased 50 basis points to 10.2% in 2025 compared to $90.1 million10.7% in 2023.2024. ForThe 2024decrease and 2023 distribution segmentin operating income and operating income as a percentage of sales is attributable to acquisitionsthe completeditems indiscussed eachabove, ofas thosewell yearsas was immaterial. Thean increase in operating incomeexpenses inand 2024operating primarilyexpenses reflectsas thea itemspercentage discussedof above.sales.
Distribution segment operating income in 2024 attributable to acquisitions completed during the year was immaterial.
During 2024, we expanded our access to capital and reduced our cost of debt by issuing $500 million in aggregate principal amount of 6.375% Senior Notes. The proceeds from the issuance, together with borrowings under the 2024 Credit Facility, were utilized to redeem all $300 million aggregate principal amount of the Company’s 7.50% Senior Notes due 2027 (the “7.50% Senior Notes”), to repay all borrowings under its existing senior secured credit facility and to pay related fees and expenses, as discussed in Note 7 "Debt" of the Notes to Consolidated Financial Statements.
Year Ended December 31, 2024 Compared to 2023
Net cash provided by operating activities increased $2.6 million, or 1%, to $329.4 million in 2025 compared to $326.8 million in 2024. The increase in operating cash flows is primarily attributable to a $42.0 million increase in deferred income taxes, a $3.7 million increase in depreciation and amortization, a $2.4 million increase in loss on sale of assets, and a $2.3 million increase related to stock based compensation, partially offset by changes in operating assets and liabilities, net of business acquisitions, which represented a source of cash of $5.6 million in 2024 compared to a use of cash of $32.9 million in 2025 as well as a $3.3 million decrease in net income compared to 2024.
Net cash provided by operating activities decreased $81.9 million, or 20%, to $326.8 million in 2024 compared to $408.7 million in 2023. The decrease in operating cash flows is primarily attributable to a decrease in operating assets and liabilities, net of business acquisitions, as a source of cash of $93.3 million, from $98.9 million in 2023 compared to $5.6 million in 2024, a decrease in net income of $4.5 million and an increase in deferred income taxes of $5.9 million, partially offset by increased depreciation and amortization expense of $22.0 million and loss on extinguishment of debt of $2.5 million.
Investing Activities
Investing Activities: Net cash used in investing activities increaseddecreased $426.3$306.4 million, to $206.5 million in 2025 compared to $512.8 million in 2024 compared to $86.5 million in 2023 primarily due to ana increasedecrease in cash used in business acquisitions, which were $121.7 million in 2025, compared to $411.7 million in 2024, primarily due to the acquisitions of Sportech and RecPro,a compared to $25.9$23.3 million decrease in 2023,other aninvesting activities, partially offset by a $7.2 million increase in cash used for capital expenditures of $16.7 million and an increase in other investing activities of $24.7 million.expenditures.
Financing Activities
Financing Activities: Net cash flows used in financing activities was $130.1 million in 2025 compared to net cash flows provided by financing activities wasof $208.2 million in 2024 compared to net cash flows used in financing activities of $333.6 million in 2023.2024. The change in financing cash flow from financing activities wasflows primarily due to net borrowings of $100 million under the Revolver due 2029 andreflects proceeds from the issuance of $500 million aggregate principal amount of 6.375% Senior Notes in 2024 and compared to cash used in 2023 to redeem the $172.5 million 1.00% Convertible Senior Notes due 2023,2024, partially offset by the redemption of the $300 million of 7.50% Senior Notes in 2024 and a $125.0 million decrease in financing cash flows related to the Revolver due 2029 compared to 2024.
What changed in the latest 10-Q
Risk Factors
New heading “Risks Related to the Proposed Merger with LCI Industries”
New heading “The merger may not be completed and the Merger Agreement may be terminated in accordance with its terms.”
New heading “Failure to complete the merger, or a delay in the closing of the merger, could negatively impact our business, results of operations, financial condition and stock price.”
New heading “The merger and integration of both companies may be more difficult, costly or time-consuming than expected, and we may fail to realize the anticipated benefits of the merger.”
New heading “The market price of the combined company's common stock following the closing of the merger may be affected by factors different from those that historically have affected or currently affect our common stock.”
New heading “We expect to incur significant additional indebtedness in connection with the merger, which indebtedness may limit our operating or financial flexibility relative to our current position and make it difficult to satisfy our obligations with respect to our other indebtedness.”
Largest changes
“On June 30, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to combine our business with LCI Industries (“LCI”). The merger is subject to a number of conditions that must be satisfied or waived prior to the closing of the merger, as more fully described in the Merger Agreement. …”see in full comparison
“The Merger Agreement is subject to a number of conditions that must be fulfilled to complete the merger. …”see in full comparison
“We expect to incur significant additional indebtedness in connection with the merger, which indebtedness may limit our operating or financial flexibility relative to our current position and make it difficult to satisfy our obligations with respect to our other indebtedness.”see in full comparison
“The market price of the combined company's common stock following the closing of the merger may be affected by factors different from those that historically have affected or currently affect our common stock.”see in full comparison
“The merger and integration of both companies may be more difficult, costly or time-consuming than expected, and we may fail to realize the anticipated benefits of the merger.”see in full comparison
“Failure to complete the merger, or a delay in the closing of the merger, could negatively impact our business, results of operations, financial condition and stock price.”see in full comparison
Full comparison: every changed paragraph (22)
ThereOther than the following risk factors, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 19, 2026.
Risks Related to the Proposed Merger with LCI Industries
The merger may not be completed and the Merger Agreement may be terminated in accordance with its terms.
On June 30, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to combine our business with LCI Industries (“LCI”). The merger is subject to a number of conditions that must be satisfied or waived prior to the closing of the merger, as more fully described in the Merger Agreement. These conditions to the consummation of the merger include: (i) the adoption of the Merger Agreement by LCI’s stockholders; (ii) the approval by our shareholders of (a) the issuance of shares of our common stock in connection with the merger and (b) an amendment to our articles of incorporation to, among other things, increase the number of our authorized shares of common stock; (iii) the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (and any timing agreement with the Federal Trade Commission or the Department of Justice, as applicable, shall have terminated or expired); (iv) the receipt of other required regulatory approvals; (v) the absence of any restraint in effect preventing the consummation of the merger; (vi) the effectiveness of a registration statement on Form S-4 with respect to such shares of our common stock to be issued in connection with the merger; (vii) the approval for listing on Nasdaq of the shares of our common stock issuable as merger consideration pursuant to the terms of the Merger Agreement; (viii), the receipt by LCI of a written opinion with respect to the tax-free nature of the merger for LCI’s stockholders; (ix) subject to certain exceptions, the accuracy of the representations and warranties of the other party; (x) performance in all material respects by each party of its respective obligations under the Merger Agreement; and (xi) the absence of certain changes that have had, or would reasonably be expected to have, a material adverse effect with respect to each of the Company and LCI. These conditions to the consummation of the merger may not be satisfied or waived in a timely manner or at all, and, accordingly, the merger may be delayed or may not be completed.
In addition, if the merger is not completed by March 30, 2027 (subject to two three-month extensions in the event that the regulatory closing conditions have not been satisfied), either party may choose not to proceed with the merger by terminating the Merger Agreement, and the parties can mutually decide to terminate the Merger Agreement at any time, before or after shareholder approval by either our shareholders or LCI’s stockholders. In addition, either party may elect to terminate the Merger Agreement in certain other circumstances.
No assurance can be given that the required shareholder approvals and regulatory clearance will be obtained or that the other required conditions to closing will be satisfied, and, if all required approvals and regulatory clearance are obtained and the required conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such approvals and clearance, including whether any required conditions will materially adversely affect the combined company following the merger. Any delay in completing the merger could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that we and LCI expect to achieve if the merger is successfully completed within its expected time frame. We can provide no assurance that these conditions will not result in the abandonment or delay of the merger. The occurrence of any of these events individually or in combination could have a material adverse effect on our results of operations, financial condition and the trading price of our common stock.
Failure to complete the merger, or a delay in the closing of the merger, could negatively impact our business, results of operations, financial condition and stock price.
The Merger Agreement is subject to a number of conditions that must be fulfilled to complete the merger. Those conditions include, among others, (i) the approval by our shareholders of (a) the issuance of shares of our common stock in connection with the merger and (b) an amendment to our articles of incorporation to, among other things, increase the number of our authorized shares of common stock, (ii) the approval by LCI stockholders of the Merger Agreement, (iii) the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (and any timing agreement with the Federal Trade Commission or the Department of Justice, as applicable, shall have terminated or expired); and (iv) the receipt of any other regulatory approvals. A number of the conditions are not within our control and may prevent, delay or otherwise materially adversely affect the closing of the merger. We cannot predict with certainty whether and when any of the required closing conditions will be satisfied or if another uncertainty may arise, and neither can we provide assurance that we will be able to timely complete the merger as currently contemplated under the Merger Agreement or at all. Our business, results of operations, financial condition or stock price could be adversely affected, potentially in a material way, by the failure to complete the merger, or by a delay in the closing of the merger, and we may suffer consequences that could adversely affect our business, results of operations, financial condition and stock price, including the following:
•we may not realize any or all of the potential benefits of the merger, including any synergies that could result from combining their financial and business resources;
•matters relating to the merger will require substantial commitments of time and resources by our management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to us;
•we have incurred and will incur further substantial expenses in connection with the merger, including financial advisory, legal, accounting, consulting and other advisory fees, severance/retention employee benefit-related costs and regulatory fees and other costs relating to the merger regardless of whether the merger is completed;
•we, LCI, and/or either companies’ boards of directors may be subject to legal proceedings related to the potential delay of, or failure to complete, the merger;
•we may experience disruptions to our business resulting from the announcement and pendency of the merger, including adverse changes in relationships with, or loss of, customers, business partners and employees, which may not be reversible and may continue or even intensify in the event the merger is delayed or not completed;
•we may experience negative reactions to the merger, including if the merger is not completed, from the financial markets, including negative impacts on the market price of our common stock; and
•under the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to completing the merger, which restrictions could adversely affect our ability to conduct our business as we otherwise would have done if not subject to these restrictions.
In addition to the above risks, we will be required to pay LCI a termination fee equal to $94.2 million in specified circumstances, including if LCI terminates the Merger Agreement following a change of recommendation by our board of directors, and LCI will be required to pay us a termination fee equal to $94.2 million in specified circumstances, including if we terminate the Merger Agreement following a change of recommendation by the LCI board of directors, in each case subject to the terms and conditions of the Merger Agreement.
The merger and integration of both companies may be more difficult, costly or time-consuming than expected, and we may fail to realize the anticipated benefits of the merger.
The success of the proposed merger will depend in part on our ability to realize anticipated revenue and cost synergies and on our ability to successfully integrate the businesses. If we are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully, or at all, or may take longer to realize than expected. In addition, our ability to achieve the goals for the proposed merger may be affected by future prospects, execution of business strategies, and our ability to manage the various factors discussed within this report, including within the forward-looking statements. The actual benefits of the proposed merger also could be less than anticipated if, for example, completion of the merger and/or integration of the businesses are more difficult, costly or time-consuming than we expect.
The market price of the combined company's common stock following the closing of the merger may be affected by factors different from those that historically have affected or currently affect our common stock.
Upon completion of the merger, the combined company's financial position may differ from each of our and LCI’s financial positions before the completion of the merger, and the results of operations of the combined company may be affected by factors that are different from those currently affecting the results of operations of each company. Accordingly, the market price and performance of the combined company's common stock is likely to be different from the performance of our common stock prior to the closing of the merger.
We expect to incur significant additional indebtedness in connection with the merger, which indebtedness may limit our operating or financial flexibility relative to our current position and make it difficult to satisfy our obligations with respect to our other indebtedness.
If the merger is completed, we expect to incur debt to finance the repayment of certain existing indebtedness of LCI. Our increased level of debt in connection with the merger could have negative consequences on us and the combined company, including, among other things, (i) requiring us, and the combined company, to dedicate a large portion of cash flow from operations to servicing and repayment of the debt, (ii) reducing funds available for strategic initiatives and opportunities, working capital and other general corporate needs, (iii) limiting our, and the combined company’s, ability to incur additional indebtedness, which could restrict its flexibility to react to changes in its business, its industry and economic conditions and (iv) placing us, and the combined company, at a competitive disadvantage compared to our competitors that have less debt. In addition, LCI’s outstanding $460.0 million aggregate principal amount of 3.00% convertible notes due 2030 are expected to remain outstanding following the closing but will become convertible into shares of Patrick common stock, and the terms of the related call options and warrants will need to be amended or adjusted with the consent of the relevant counterparties, which consent may not be obtained on favorable terms or at all. Failure to obtain such consents could result in economic inefficiencies in the combined company’s capital structure or require the expenditure of additional resources to resolve such issues, which could adversely affect the combined company’s results of operations or financial condition.
Management's Discussion & Analysis (MD&A)
New heading “EXECUTIVE SUMMARY”
Largest changes
see in full comparisonOperatingManufacturingIncome.segmentOperatinggrossincomeprofitdecreasedincreased$3.3$5.7 million, or3%,2%, to$94.8$354.4 millionforin thethreefirst six monthsended March 29,of 2026 compared to$98.1$348.7 millionforin thethreefirst six monthsended March 30,of 2025. As a percentage of sales,operatinggrossincomeprofit decreased8050 basis points to12.2%22.3%forin thethreefirst six monthsended March 29,of 2026 compared to13.0%22.8%forin thethreepriormonthsyearended March 30, 2025.period. The decrease inoperatinggrossincome and operating incomeprofit as a percentage of salesisinprimarilytherelatedfirst six months of 2026 compared to theitemssamediscussed above combined with an increaseperiod inoperating2025expensesis attributable to increased labor andoperatingoverheadexpensescosts as a percentage of sales, partially offset by decreased material costs as a percentage of sales.
“For the three months ended June 28, 2026, cost of goods sold as a percentage of net sales increased as a result of increased material and overhead costs, partially offset by continued cost reduction and automation initiatives we deployed throughout 2025 and into 2026 that had a positive impact on labor. …”see in full comparison
“Distribution segment gross profit decreased $16.4 million, or 12%, to $117.5 million for the first six months of 2026 compared to $133.9 million for the first six months of 2025. As a percentage of sales, gross profit increased 20 basis points to 25.4% for the first six months of 2026 compared to 25.2% in the prior year period. …”see in full comparison
Three and Six Months Endedsee in full comparisonMarchJune29,28, 2026 Compared tothe Three Months Ended March 30,2025
Three and Six Months Endedsee in full comparisonMarchJune29,28, 2026 Compared tothe Three Months Ended March 30,2025
Full comparison: every changed paragraph (70)
EXECUTIVE SUMMARY
Recent Events
On June 30, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with LCI Industries (“LCI”) and two wholly owned merger subsidiaries of the Company. The boards of directors of both the Company and LCI unanimously approved the Merger Agreement and the transactions contemplated thereby. Under the Merger Agreement, and subject to customary closing conditions, LCI will merge with subsidiaries of the Company and become a wholly owned subsidiary of the Company. At the effective time of the merger, each issued and outstanding share of LCI common stock, par value $0.01 per share, other than certain excluded shares, will be converted into the right to receive 1.2440 shares of the Company’s common stock, no par value, plus cash in lieu of fractional shares. Following completion of the transaction, existing Company shareholders are expected to own approximately 52% of the combined company, and existing LCI shareholders are expected to own approximately 48%. The transaction remains subject to customary closing conditions, including shareholder and regulatory approvals, and has not been completed as of the date of this filing.
In connection with the pending merger, the Company expects to incur additional transaction and integration-related costs, including legal, financial advisory, accounting, consulting, regulatory, filing and other related costs, some of which will be incurred regardless of whether the transaction is completed. The amount and timing of these costs cannot be estimated with certainty at this time and will depend on, among other things, the timing and outcome of required shareholder and regulatory approvals and integration planning. In addition, if the Merger Agreement is terminated under specified circumstances, the Company may be required to pay LCI a termination fee of $94.2 million. The Company expects to fund merger-related costs from cash on hand, cash from operations and/or borrowings under the revolving credit and term loan facility (the “2024 Credit Facility”).
Three and Six Months Ended MarchJune 29,28, 2026 Financial Overview
For the three months ended March 29, 2026 and March 30, 2025, netNet sales to the RV industry were 45%39% and 48%42% of the Company's net sales,sales for the three and six months ended June 28, 2026, respectively, and 46% and 47% for the three and six months ended June 29, 2025, respectively. Net sales to the RV industry decreased 7%15% and 11% for the three and six months ended MarchJune 29,28, 20262026, respectively, compared to the prior year period.periods.
According to the RV Industry Association ("RVIA"), RV wholesale unit shipments for the three months ended MarchJune 29,28, 2026 totaled approximately 86,10077,600 units, a decrease of 12%16% compared to approximately 97,80092,900 units for the three months ended MarchJune 30,29, 2025. We estimate that RV industry retail unit sales decreased 13%12% for the three months ended MarchJune 29,28, 2026 compared to the prior year period. WholesaleRetail unit sales exceeded wholesale unit shipments exceeded retail unit sales duringin the period,three reflectingmonths ended June 28, 2026 as RV OEMs maintained lower retailproduction demand and a modest increase in dealer inventory levels.volumes.
According to the RVIA, RV wholesale unit shipments for the first six months of 2026 totaled approximately 163,600 units, a decrease of 14% from approximately 190,700 units for the first six months of 2025. While we estimate RV industry retail unit sales for the first six months of 2026 decreased by approximately 14% compared to the first six months of 2025, we estimate that wholesale unit shipments exceeded retail unit sales during the period, reflecting lower retail demand and a modest increase in dealer inventory levels.
For the three months ended March 29, 2026 and March 30, 2025, netNet sales to the marine industry were 17% and 15%18% of the Company's net sales,sales respectively.for both the three and six months ended June 28, 2026, and 15% for both the three and six months ended June 29, 2025. Net sales to the marine industry increased 14%22% forand 18% in the three and six months ended MarchJune 29,28, 20262026, respectively, compared to the prior year period.periods.
Our marine revenue is generally correlated to marine industry wholesale powerboat unit shipments. According to Company estimates based on data published by the National Marine Manufacturers Association ("NMMA"), wholesale powerboat unit shipments remained flat and decreased 7%2% for the three and six months ended MarchJune 29,28, 20262026, respectively, compared to the threeprior monthsyear ended March 30, 2025.periods. We estimate that marine industry retail powerboat unit sales decreased 7%6% and 5% for the three and six months ended MarchJune 29,28, 20262026, respectively, compared to the prior year period.periods, Wholesaleprimarily unitdue shipments exceeded retail unit sales duringto the period,current reflectingmacroeconomic lowerenvironment retailfaced demandby the end consumer, such as economic uncertainty and avolatile modestoil increase in dealer inventory levels.prices.
For the three months ended March 29, 2026 and March 30, 2025, netNet sales to the powersports industry were 10%12% and 8%11% of the Company's net sales,sales respectively.for the three and six months ended June 28, 2026, respectively, and 9% for both the three and six months ended June 29, 2025. Net sales to the powersports industry increased 28% for both the three and six months ended MarchJune 29,28, 2026 compared to the prior year period.periods.
For the three months ended March 29, 2026 and March 30, 2025, netNet sales to the MH industry were 16%17% and 17%16% of the Company's net sales,sales respectively.for the three and six months ended June 28, 2026, respectively, and 17% for both the three and six months ended June 29, 2025. Net sales to the MH industry decreased 11%4% and 7% for the three and six months ended MarchJune 29,28, 20262026, respectively, compared to the prior year period.periods.
According to Company estimates based on industry data from the Manufactured Housing Institute, MH industry wholesale unit shipments decreased 11%8% forin both the three and six months ended MarchJune 29,28, 2026 compared to the prior year period.periods.
For the three months ended March 29, 2026 and March 30, 2025, netNet sales to the industrial market were 12%14% and 13% of the Company's net sales infor boththe periods.three and six months ended June 28, 2026, respectively, and 13% and 12% for the three and six months ended June 29, 2025, respectively. Net sales to the industrial market increased 1%9% and 5% for the three and six months ended MarchJune 29,28, 20262026, respectively, compared to the prior year period.periods.
According to the Company estimates basedBased on U.S. Census Bureau data, combined new housing starts increaseddecreased 1% for the threesecond monthsquarter ended March 29,of 2026 compared to the prior year period, reflecting an increase in multifamily housing starts of 19%,8% partially offset byand a decrease in single-family housing starts of 6%.4%.
For the first six months of 2026, combined new housing starts increased 1% compared to the prior year period, reflecting a decrease in single-family housing starts of 5% and an increase in multifamily housing starts of 15%. Our industrial products are generally among the last components installed in new unit construction and as such our related sales typically trail new housing starts by four to six months.
Three and Six Months Ended MarchJune 29,28, 2026 Compared to the Three Months Ended March 30, 2025
Net Sales. Net sales decreased $6.2$5.9 million, or 1%, to $997.2 million for the three months ended March 29, 2026 compared to $1.00$1.04 billion for the three months ended MarchJune 30,28, 2026 compared to $1.05 billion for the three months ended June 29, 2025. The decrease was driven by lower sales to the RV and MH markets, partially offset by increased sales to the powersports,marine, marinepowersports and industrial markets. Sales to the RV market decreased $32.4$72.3 million, or 7%,15%, compared to the prior year period, primarily due to a decrease in estimated wholesale unit shipments of approximately 12%.16%. Sales to the MH market decreased $18.7$7.3 million, or 11%,4%, compared to the prior year period, primarily due to a decrease in estimated MH industry wholesale unit shipments of approximately 11%.8%. Sales to the marine market increased $34.9 million, or 22%, primarily attributable to incremental sales from acquisitions completed in the prior year and organic growth. Sales to the powersports market increased $22.7$26.7 million, or 28%, compared to the prior year period, primarily reflecting higher attachment rates on premium utility vehicles compared to the prior year period. Sales to the marine market increased $20.8 million, or 14%, primarily attributable to incremental sales from acquisitions completed in the prior year. Sales to the industrial market increased $1.3$12.1 million, or 1%,9%, compared to the prior year period, which is attributable to market share gains and product mix shifts by certain customers.
Net sales for the first six months of 2026 decreased $12.1 million, or 1%, to $2.04 billion compared to $2.05 billion for the first six months of 2025. The decrease was driven by lower sales to the RV and MH markets, partially offset by increased sales to the marine, powersports and industrial markets. Sales to the RV market decreased $104.7 million, or 11%, compared to the first six months of 2025, due to a decrease in RV wholesale unit shipments of 14%. Sales to the MH market decreased $25.9 million, or 7%, compared to the first six months of 2025, primarily due to a decrease in estimated MH industry wholesale unit shipments of approximately 8%. Sales to the marine market increased $55.7 million, or 18%, compared to the first six months of 2025, primarily attributable to incremental sales from acquisitions completed in 2025 and organic growth. Sales to the powersports market increased $49.4 million, or 28%, compared to the first six months of 2025, primarily reflecting higher attachment rates on premium utility vehicles compared to the prior year period. Sales to the industrial market increased $13.4 million, or 5%, compared to the first six months of 2025, primarily related to product mix shifts by certain customers.
Revenue in the three months ended March 29, 2026 attributable to acquisitions completed duringin suchthe periodfirst six months of 2026 was immaterial.$1.8 Revenuemillion infor both the three and six months ended MarchJune 30,28, 20252026. Revenue attributable to acquisitions completed duringin suchthe periodfirst wassix $4.3months million.of 2025 were $8.9 million and $13.2 million for the three and six months ended June 29, 2025, respectively.
Cost of Goods Sold. Cost of goods sold decreased $4.5$2.8 million, or less than 1%, to $770.3$794.1 million for the three months ended MarchJune 29,28, 2026 compared to $774.8$796.9 million for the three months ended MarchJune 30,29, 2025. As a percentage of net sales, cost of goods sold remainedincreased flat10 atbasis 77.2%points forin boththe periods.three months ended June 28, 2026 to 76.2% compared to 76.1% in the prior year period.
Gross Profit. Gross profit decreased $1.7 million, or 1%, to $226.9 million for the three months ended March 29, 2026 compared to $228.6 million for the three months ended March 30, 2025. As a percentage of net sales, gross profit remained flat at 22.8% for both periods.
WarehouseCost andof Deliverygoods Expenses.sold Warehousedecreased and delivery expenses increased $0.5$7.3 million, or less than 1%, to $45.0$1.56 millionbillion for the threefirst six months ended March 29,of 2026 compared to $44.6$1.57 millionbillion for the threefirst six months ended March 30,of 2025. As a percentage of net sales, warehousecost andof deliverygoods expensessold increased 10 basis points for the first six months of 2026 to 4.5%76.7% compared to 76.6% for the threefirst six months ended March 29, 2026 compared to 4.4% for the three months ended March 30,of 2025.
For the three months ended June 28, 2026, cost of goods sold as a percentage of net sales increased as a result of increased material and overhead costs, partially offset by continued cost reduction and automation initiatives we deployed throughout 2025 and into 2026 that had a positive impact on labor. Cost of goods sold as a percentage of net sales increased for the first six months of 2026 primarily as a result of increased overhead costs, partially offset by decreased material costs and continued cost reduction and automation initiatives we deployed throughout 2025 and into 2026 that had a positive impact on labor.
The increase in warehouse and delivery expenses and increase as a percentage of net sales for the three months ended March 29, 2026 compared to the same period in 2025 is primarily related to higher freight costs.
Selling, General and Administrative ("SG&A") Expenses. SG&A expenses decreased $0.8 million, or 1%, to $93.1 million for the three months ended March 29, 2026 compared to $93.9 million for the three months ended March 30, 2025. The decrease in SG&A expenses for the three months ended March 29, 2026 compared to the prior year period is primarily related to a decreased loss on sale of assets and decreased wages and insurance expense, partially offset by increased professional fees and incentive compensation.
As a percentage of net sales, SG&A expenses decreased 10 basis points to 9.3% for the three months ended March 29, 2026 compared to 9.4% for the three months ended March 30, 2025 reflecting the expense changes above.
Amortization of Intangible Assets. Amortization of intangible assets decreased $0.5 million, or 2%, to $24.0 million for the three months ended March 29, 2026 compared to $24.5 million for the three months ended March 30, 2025. The decrease in amortization expense for the three months ended March 29, 2026 compared to the comparable prior year period primarily reflects certain intangible assets that were fully amortized in the prior year.
Operating Income. Operating income decreased $0.8 million, or 1%, to $64.7 million for the three months ended March 29, 2026 compared to $65.6 million for the three months ended March 30, 2025. As a percentage of net sales, operating income remained flat at 6.5% for both periods. The decrease in operating income is primarily attributable to the items discussed above.
InterestGross Expense,Profit. Net.Gross Interest expenseprofit decreased $0.7$3.1 million, or 4%,1%, to $18.4$247.6 million for the three months ended MarchJune 29,28, 2026 compared to $19.1$250.6 million for the three months ended MarchJune 30,29, 2025. The decrease primarily reflectsAs a lowerpercentage averageof interestnet ratesales, ongross ourprofit outstandingdecreased debt10 basis points to 23.8% for the three months ended June 28, 2026 compared to the prior year period.
Gross profit decreased $4.8 million, or 1%, to $474.4 million for the first six months of 2026 compared to $479.2 million in the prior year period. As a percentage of net sales, gross profit decreased 10 basis points to 23.3% for the first six months of 2026 compared to 23.4% for the prior year period. The change in gross profit as a percentage of net sales in the second quarter and first six months of 2026 compared to the same periods in 2025 reflects the impact of the factors discussed above under "Cost of Goods Sold".
IncomeWarehouse Taxes.and IncomeDelivery taxExpenses. expenseWarehouse decreasedand $1.4delivery expenses increased $4.5 million, or 10%, to $50.6 million for the three months ended MarchJune 29,28, 2026, to $6.9 million,2026 compared to $8.2$46.1 million for the three months ended MarchJune 30,29, 2025. TheAs effectivea taxpercentage rateof wasnet 14.8%sales, warehouse and 17.7%delivery expenses increased 50 basis points to 4.9% for the three months ended MarchJune 28, 2026 compared to 4.4% for the three months ended June 29, 2026 and March 30, 2025, respectively.2025.
Warehouse and delivery expenses increased $5.0 million, or 5%, to $95.6 million for the first six months of 2026 compared to $90.7 million for the prior year period. As a percentage of net sales, warehouse and delivery expenses increased 30 basis points to 4.7% for the first six months of 2026 compared to 4.4% for the first six months of 2025.
The decreaseincrease in incomewarehouse taxand expensedelivery expenses and increase as a percentage of net sales for the three and six months ended MarchJune 29,28, 2026 compared to the threesame monthsperiods ended March 30,in 2025 is primarily reflects higher excess tax benefits related to share-basedhigher compensationfuel and lowerfreight income before income taxes.costs.
Selling, General and Administrative ("SG&A") Expenses. SG&A expenses increased $3.0 million, or 3%, to $96.2 million for the three months ended June 28, 2026 compared to $93.2 million for the three months ended June 29, 2025. The increase in SG&A expenses for the three months ended June 28, 2026 compared to the prior year period is primarily related to increased professional fees, wages, technology expenses, incentive compensation and selling expenses, partially offset by increased gain on sale of assets and decreased insurance expenses.
As a percentage of net sales, SG&A expenses increased 30 basis points to 9.2% for the three months ended June 28, 2026 compared to 8.9% in the prior year period. The increase in SG&A expenses as a percentage of net sales for the three months ended June 28, 2026 is primarily attributable to increased professional fees and technology expenses.
SG&A expenses increased $2.1 million, or 1%, to $189.3 million for the first six months of 2026 compared to $187.1 million in the prior year period. The increase in SG&A expenses for the first six months of 2026 compared to 2025 is primarily attributable to increased professional fees and incentive compensation, partially offset by an increased gain on sale of assets and decreased wages, insurance and selling expenses.
As a percentage of net sales, SG&A expenses increased 20 basis points to 9.3% for the first six months of 2026 compared to 9.1% in the prior year period. The increase in SG&A expenses as a percentage of net sales for the first six months of 2026 is primarily attributable to increased professional fees and incentive compensation, partially offset by decreased insurance related costs and an increased gain on sale of fixed assets.
Amortization of Intangible Assets. Amortization of intangible assets decreased $0.9 million, or 4%, to $23.7 million for the three months ended June 28, 2026 compared to $24.6 million for the three months ended June 29, 2025. Amortization of intangible assets decreased $1.4 million, or 3%, to $47.8 million for the first six months of 2026 compared to $49.1 million in the prior year period. The decrease in amortization of intangible assets for the three and six months ended June 28, 2026 compared to the prior year periods primarily reflects certain intangible assets that were fully amortized in the prior year.
Operating Income. Operating income decreased $9.7 million, or 11%, to $77.0 million for the three months ended June 28, 2026 compared to $86.7 million for the three months ended June 29, 2025. As a percentage of net sales, operating income decreased to 7.4% compared to 8.3% for the prior year period. The decrease in operating income and operating income as a percentage of net sales is primarily attributable to the items discussed above.
Operating income decreased $10.5 million to $141.8 million for the first six months of 2026 compared to $152.3 million in the prior year period. Operating income as a percentage of net sales decreased to 7.0% for the first six months of 2026 compared to 7.4% for the first six months of 2025. The decrease in operating income and operating income as a percentage of net sales is primarily attributable to the items discussed above.
Interest Expense, Net. Interest expense increased $0.1 million, or 1%, to $19.0 million for the three months ended June 28, 2026 compared to $18.9 million for the three months ended June 29, 2025. Interest expense decreased $0.6 million, or 2%, to $37.4 million for the first six months of 2026 compared to $38.0 million for the first six months of 2025.
Other Expenses. Other expenses were zero for the three and six months ended June 28, 2026. Other expenses were $24.4 million for the three and six months ended June 29, 2025, reflecting expenses related to a legal settlement.
Income Taxes. Income tax expense increased $3.6 million for the three months ended June 28, 2026, to $14.6 million, compared to $11.0 million for the three months ended June 29, 2025. Income tax expense increased $2.3 million for the first six months of 2026 to $21.5 million compared to $19.2 million in the prior year period. The effective tax rate was 25.2% and 20.6% in the three and six months ended June 28, 2026, respectively, and 25.3% and 21.4% in the three and six months ended June 29, 2025, respectively.
The increase in income tax expense for the three and six months ended June 28, 2026 compared to the three and six months ended June 29, 2025 primarily reflects higher income before tax, partially offset by higher excess tax benefits related to share-based compensation.
Three and Six Months Ended MarchJune 29,28, 2026 Compared to the Three Months Ended March 30, 2025
Sales. Manufacturing segment sales increased $25.5$30.4 million, or 3%,4%, to $780.0$806.9 million for the three months ended MarchJune 29,28, 2026 compared to $754.5$776.5 million for the three months ended MarchJune 30,29, 2025. For the first six months of 2026, sales increased $55.9 million, or 4%, to $1.59 billion compared to $1.53 billion in the prior year period. The manufacturing segment accounted for approximately 78%77% and 75%74% of the Company’s sales for the three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, and approximately 77% and 74% of the Company’s sales for the six months ended June 28, 2026 and June 29, 2025, respectively.
Manufacturing segment sales increased for the three months ended June 28, 2026 due to higher sales to the powersports,marine, marinepowersports and industrial markets, partially offset by decreased sales to the RV and MH markets. Sales to the marine market increased $34.4 million, or 24%, compared to the prior year period, attributable to incremental sales from acquisitions completed in the prior year and organic growth. Sales to the powersports market increased $21.3$25.4 million, or 28%, compared to the prior year period, primarily reflecting higher attachment rates on premium utility vehicles compared to the prior year period. Sales to the marineindustrial market increased $21.1$12.4 million, or 15%,10%, compared to the prior year period,period primarily reflecting the impact of acquisitions completed in the prior year. Salesdue to the industrial market increasedshare $2.1gains million,and orproduct 2%,mix comparedshifts toby thecertain prior year period.customers. Sales to the RV market decreased $14.2$40.2 million, or 4%,12%, compared to the prior year period, primarily due to a decrease in estimated RV industry wholesale unit shipments of approximately 12%.16%. Sales to the MH market decreased $5.0$1.1 million, or 7%,1%, compared to the prior year period, primarily due to a decrease in estimated MH industry wholesale unit shipments of approximately 11%.period.
Manufacturing segment sales increased for the first six months of 2026 compared to the same prior year period due to increased sales to the marine, powersports, and industrial markets, partially offset by decreased sales to the RV and MH markets. Sales to the marine market increased $55.5 million, or 20%, compared to the prior year period, primarily attributable to incremental sales from acquisitions completed in the prior year and organic growth. Sales to the powersports market increased $46.7 million, or 28% compared to the prior year period, primarily reflecting higher attachment rates on premium utility vehicles compared to the prior year period. Sales to the industrial market increased $14.5 million, or 6%, compared to the prior year period, primarily due to market share gains and product mix shifts of certain customers. Sales to the RV market decreased $54.4 million, or 8%, compared to the prior year period, primarily attributable to a decrease in estimated wholesale unit shipments of 14%, partially offset by market share gains. Sales to the MH market decreased $6.1 million, or 4%, compared to the prior year period, primarily due to a decrease in estimated MH industry wholesale unit shipments of approximately 8%, partially offset by market share gains.
Manufacturing segment sales in the three months ended March 29, 2026 attributable to acquisitions completed duringin suchthe periodfirst six months of 2026 were immaterial.$0.8 million for both the three and six months ended June 28, 2026. Manufacturing segment sales in the three months ended March 30, 2025 attributable to acquisitions completed duringin suchthe periodfirst six months of 2025 were $4.3$8.9 million.million and $13.2 million for the three and six months ended June 29, 2025, respectively.
Gross Profit. Manufacturing segment gross profit increased $1.5$4.3 million, or 1%,2%, to $170.9$183.6 million for the three months ended MarchJune 29,28, 2026 compared to $169.4$179.3 million for the three months ended MarchJune 30,29, 2025. As a percentage of sales, gross profit decreased 6040 basis points to 21.9%22.7% for the three months ended MarchJune 29,28, 2026 compared to 22.5%23.1% for the three months ended MarchJune 30,29, 2025. The decrease in gross profit as a percentage of sales for the three months ended MarchJune 29,28, 2026 compared to the prior year period is attributable to increased labor and manufacturing overhead costs as a percentage of sales, partially offset by decreased material costs as a percentage of sales.
OperatingManufacturing Income.segment Operatinggross incomeprofit decreasedincreased $3.3$5.7 million, or 3%,2%, to $94.8$354.4 million forin the threefirst six months ended March 29,of 2026 compared to $98.1$348.7 million forin the threefirst six months ended March 30,of 2025. As a percentage of sales, operatinggross incomeprofit decreased 8050 basis points to 12.2%22.3% forin the threefirst six months ended March 29,of 2026 compared to 13.0%22.8% forin the threeprior monthsyear ended March 30, 2025.period. The decrease in operatinggross income and operating incomeprofit as a percentage of sales isin primarilythe relatedfirst six months of 2026 compared to the itemssame discussed above combined with an increaseperiod in operating2025 expensesis attributable to increased labor and operatingoverhead expensescosts as a percentage of sales, partially offset by decreased material costs as a percentage of sales.
Operating Income. Operating income increased $0.3 million, or less than 1%, to $103.4 million for the three months ended June 28, 2026 compared to $103.1 million for the three months ended June 29, 2025. As a percentage of sales, operating income decreased 50 basis points to 12.8% for the three months ended June 28, 2026 compared to 13.3% for the three months ended June 29, 2025. The increase in operating income is primarily attributable to the items discussed above, partially offset by an increase in operating expenses. The decrease in operating income as a percentage of sales is primarily related to the items discussed above combined with an increase in operating expenses as a percentage of sales.
Operating income decreased $3.0 million, or 1%, to $198.3 million for the first six months of 2026 compared to $201.2 million in the prior year period. As a percentage of sales, operating income decreased 60 basis points to 12.5% in the first six months of 2026 compared to 13.1% in the prior year period. The decrease in operating income and operating income as a percentage of sales is primarily attributable to the items discussed above combined with an increase in operating expenses and operating expenses as a percentage of sales.
Sales. Distribution segment sales decreased $31.5$36.7 million, or 12%,13%, to $222.6$240.8 million for the three months ended MarchJune 29,28, 2026 compared to $254.1$277.5 million for the three months ended MarchJune 30,29, 2025. For the first six months of 2026, sales decreased $68.3 million, or 13%, to $463.3 million compared to $531.6 million in the prior year period. The distribution segment accounted for approximately 22%23% and 25%26% of the Company’s sales for the three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, and approximately 23% and 26% of the Company’s sales for the six months ended June 28, 2026 and June 29, 2025, respectively.
Distribution segment sales decreased for the three months ended June 28, 2026 compared to the prior year period due to lower sales to the RV, MH, industrial,MH and marineindustrial markets, partially offset by increased sales to the powersports market.and marine markets. Sales to the RV market decreased $18.2$32.1 million, or 14%,22%, compared to the prior year period, primarily attributable to a decrease in estimated RV industry wholesale unit shipments of approximately 12%.16% and product mix shifts by certain customers. Sales to the MH market decreased $13.7$6.2 million, or 14%,6%, compared to the prior year period, primarily due to a decrease in estimated MH industry wholesale unit shipments of approximately 11%.8%. Sales to the industrial market decreased $0.8 million, or 8%, compared to the prior year period. Sales to the marine market decreased $0.2 million, or 2%, compared to the prior year period. Sales to the powersports market increased $1.4$1.2 million, or 37%,27%, compared to the prior year period. Sales to the marine market increased $0.5 million, or 4%, compared to the prior year period.
Distribution segment sales decreased for the first six months of 2026 compared to the first six months of 2025 due to lower sales to the RV, MH and industrial markets, partially offset by increased sales to the powersports and marine markets. Sales to the RV market decreased $50.3 million, or 18%, compared to the first six months of 2025, due to a decrease in estimated RV industry wholesale unit shipments of approximately 14% and product mix shifts by certain customers. Sales to the MH market decreased $19.9 million, or 10%, compared to the first six months of 2025, primarily due to a decrease in estimated MH industry wholesale unit shipments of approximately 8%. Sales to the industrial market decreased $1.0 million, or 5%, compared to the first six months of 2025. Sales to the powersports market increased $2.6 million, or 31%, compared to the first six months of 2025, primarily reflecting higher attachment rates on premium utility vehicles compared to the prior year period. Sales to the marine market increased $0.2 million, or 1%, compared to the first six months of 2025.
Distribution segment sales attributable to acquisitions completed in the first six months of 2026 were $1.0 million in both the three and six months ended June 28, 2026.
Gross Profit. Distribution segment gross profit decreased $5.6$10.8 million, or 9%,15%, to $56.1$61.4 million for the three months ended MarchJune 29,28, 2026 compared to $61.7$72.2 million for the three months ended MarchJune 30,29, 2025. As a percentage of sales, gross profit increaseddecreased 9050 basis points to 25.2%25.5% for the three months ended MarchJune 29,28, 2026 compared to 24.3%26.0% in the prior year period. The increasedecrease in gross profit as a percentage of sales for the three months ended MarchJune 29,28, 2026 compared to the prior year period is attributable to increased material costs as a percentage of sales, partially offset by decreased labor and manufacturing overhead costs as a percentage of sales.
Distribution segment gross profit decreased $16.4 million, or 12%, to $117.5 million for the first six months of 2026 compared to $133.9 million for the first six months of 2025. As a percentage of sales, gross profit increased 20 basis points to 25.4% for the first six months of 2026 compared to 25.2% in the prior year period. The increase in gross profit as a percentage of sales for the first six months of 2026 compared to the prior year period is attributable to decreased labor and manufacturing overhead costs as a percentage of sales, partially offset by increased material costs as a percentage of sales.
PATK insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 8 Form 4 filings (6 insiders, 4 trade dates, 28,700 shares, about $2.5M) and open-market sales in 0 filings. Net open-market shares: 28,700 (purchases minus sales); net value about $2.5M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-10 | Welch M Scott |
Open-market purchase | 100 | $83.85 | $8.4K |
| 2026-05-28 | Rodino Jeffrey M |
Gift | 500 | — | — |
| 2026-05-19 | Welch M Scott |
Open-market purchase | 100 | $89.44 | $8.9K |
| 2026-05-14 | Suggs Denis G |
Grant/award | 1,594 | — | — |
| 2026-05-14 | Welch M Scott |
Grant/award | 1,594 | — | — |
| 2026-05-14 | Kitson Michael A |
Grant/award | 1,594 | — | — |
| 2026-05-14 | Cleveland Todd M |
Grant/award | 1,594 | — | — |
| 2026-05-14 | Forbes John A |
Grant/award | 1,594 | — | — |
| 2026-05-14 | Cerulli Joseph M |
Grant/award | 1,594 | — | — |
| 2026-05-14 | Brown Natalie A |
Grant/award | 1,594 | — | — |
| 2026-05-14 | Augsburger Blake |
Grant/award | 1,594 | — | — |
| 2026-05-06 | Petkovich Jacob R |
Open-market purchase | 1,300 | $95.57 | $124.2K |
| 2026-05-05 | Augsburger Blake |
Open-market purchase | 400 | $85.19 | $34.1K |
| 2026-05-05 | Nemeth Andy L |
Open-market purchase | 10,000 | $88.00 | $880.0K |
| 2026-05-05 | Welch M Scott |
Open-market purchase | 50 | $88.41 | $4.4K |
| 2026-05-05 | Welch M Scott |
Open-market purchase | 10,000 | $88.23 | $882.3K |
| 2026-05-05 | Filer Matthew S |
Open-market purchase | 1,000 | $85.50 | $85.5K |
| 2026-05-05 | Roeder Charles R |
Open-market purchase | 5,750 | $87.83 | $505.0K |
Well-known investors holding PATK (13F)
None of the 59 investors we track reported a position in their latest 13F.