Patrick Industries, Inc.

What they do

Patrick manufactures and distributes components for OEMs in the RV, marine, powersports, manufactured housing and industrial markets, operating through two reportable segments: Manufacturing (74% of 2025 consolidated net sales) and Distribution (26%). As of December 31, 2025, the company operated roughly 191 manufacturing plants and 50 warehouse and distribution facilities across 25 states, with a small presence in Mexico, China and Canada. Products range from laminated furniture and countertops, fabricated aluminum, wiring and wire harnesses, and fiberglass bath fixtures to wall panels, lighting, electronics, roofing and marine hardware. The RV industry is its primary market.

Revenue drivers

• RV end market — Primary market; net sales to RV were 39% of second-quarter 2026 net sales but fell 15% year over year, driven by a 16% decline in RV industry wholesale unit shipments.
• Marine end market — 18% of second-quarter 2026 net sales; revenue rose 22% on 22% trailing-twelve-month growth in estimated marine content per unit despite flat wholesale powerboat shipments.
• Powersports and Housing end markets — Second-quarter 2026 revenue grew 28% in Powersports and 2% in Housing, using higher attachment rates and diversified product lines to offset RV softness.
• Distribution segment — 26% of 2025 consolidated net sales; distributes pre-finished panels, drywall, lighting, wiring and plumbing, lumber, flooring, appliances and other aftermarket and OEM components.

Recent performance

Second-quarter 2026 net sales were $1.04 billion, down less than 1% from $1.05 billion a year earlier, as 22% Marine, 28% Powersports and 2% Housing growth nearly offset a 15% RV revenue decline. Operating income was $77 million with a 7.4% operating margin, versus $87 million and 8.3% a year earlier; adjusted operating margin was 7.5% versus 8.3%. Net income rose 34% to $43 million and diluted EPS rose 33% to $1.28, while adjusted net income was $44 million, or $1.29 per diluted share, versus $51 million, or $1.50. Adjusted EBITDA was $126 million (12.1% margin) versus $135 million (12.9% margin). Year-to-date operating cash flow was $69 million versus $189 million, and trailing-twelve-month free cash flow was $128 million.

Strategy

Management frames the company as a diversified component solutions provider pursuing organic and strategic growth across distinct end markets while managing through a challenging consumer discretionary environment. Over the last three years Patrick completed acquisitions and new product initiatives for aggregate cash consideration of approximately $560 million net of cash acquired, expanding into adjacent end markets. Capital allocation includes reinvestment in the business and returning capital to shareholders; in the second quarter of 2026 alone it returned $106 million, comprising $15 million of dividends and $91 million of share repurchases, and it returned $87 million in 2025. On June 30, 2026, Patrick signed a definitive all-stock merger agreement with LCI Industries in which LCI shareholders would receive 1.2440 PATK shares per LCI share, with existing Patrick holders expected to own approximately 52% of the combined company.

Risks

• RV cyclicality and declining shipments — RV is Patrick's primary market, and RV wholesale unit shipments declined 16% in the second quarter of 2026 and 14% in the first half, directly pressuring revenue and margins.
• Merger execution and termination fee — The pending LCI merger requires shareholder and regulatory approvals, is not completed, and carries a $94.2 million termination fee if the agreement is terminated under specified circumstances.
• Consumer discretionary and cost pressures — The company cites inflation, higher oil and fuel prices and related fuel surcharges, interest rates and reduced discretionary spending as factors that have weighed on margins and demand.
• Tariffs and raw material availability — Risk factors specifically identify the imposition of restrictions and taxes and/or tariffs on imports of raw materials and components, plus costs and availability of raw materials and commodities.

Outlook

Management said second-quarter results reflect a diversified platform, disciplined production schedules and prudent inventory management across the value chain, while noting an uncertain and volatile market and soft consumer discretionary environment. Patrick continues to invest in innovation and operational efficiencies and preserve flexibility to meet customer expectations, while preparing for the pending LCI combination. The transaction remains subject to customary closing conditions, including shareholder and regulatory approvals, and is expected to generate additional transaction and integration costs. Management expects to fund merger-related costs from cash on hand, cash from operations and/or borrowings under the 2024 Credit Facility.