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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 182 added, 94 removed, 101 unchanged (73% of the section changed)

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OVERVIEW OF MARKETS AND RELATED INDUSTRY PERFORMANCE

First Quarter 2025 Financial Overview

Second Quarter and First Six Months 2025 Financial Overview

Recreational Vehicle ("RV") Industry

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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 48% and 45% of the Company's net sales in the first quarter ended March 30, 2025 and March 31, 2024, respectively.

Net sales to the RV industry in the first quarter of 2025 increased 14% compared to the prior year period.

According to the RV Industry Association ("RVIA"), RV wholesale unit shipments in the first quarter of 2025 totaled approximately 97,800 units, an increase of 14% from approximately 85,900 units in the first quarter of 2024.

While we estimate RV industry retail unit sales in the first quarter of 2025 decreased by approximately 7% compared to the first quarter of 2024, we estimate that wholesale unit shipments exceeded industry retail unit sales in the first quarter of 2025 as RV OEMs increased production volumes in anticipation of higher retail demand later in the year.

The RV industry is our primary market and comprised 46% and 47% of the Company's net sales in the second quarter and six months ended June 29, 2025, respectively, and 44% in both the second quarter and six months ended June 30, 2024.

Net sales to the RV industry in the second quarter and six months ended June 29, 2025 increased 7% and 10%, respectively, compared to the prior year periods.

According to the RV Industry Association ("RVIA"), RV wholesale unit shipments in the second quarter of 2025 totaled approximately 92,900 units, or flat compared to approximately 92,700 units in the second quarter of 2024.

While we estimate RV industry retail unit sales in the second quarter of 2025 decreased by approximately 3% compared to the second quarter of 2024, we estimate that retail unit sales exceeded wholesale unit shipments in the second quarter of 2025 as RV OEMs maintained lower production volumes.

RV wholesale unit shipments for the first six months of 2025 totaled approximately 190,700 units, an increase of 7% from approximately 178,600 units in the first six months of 2024.

While we estimate RV industry retail unit sales in the first six months of 2025 decreased by approximately 4% compared to the first six months of 2024, we estimate that wholesale unit shipments exceeded retail unit sales in the first six months of 2025 as RV OEMs increased production volumes in the first quarter of 2025 in anticipation of higher retail demand later in the year.

Marine Industry

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fiberglass, aluminum fishing, pontoon and ski & wake.

Net sales to the marine industry comprised approximately 15% and 17% of the Company's net sales in the first quarter ended March 30, 2025 and March 31, 2024, respectively.

Net sales to the marine industry decreased 4% compared to the prior year period.

Net sales to the marine industry comprised 15% of the Company's net sales in both the second quarter and six months ended June 29, 2025 and 16% in both the second quarter and six months ended June 30, 2024.

Net sales to the marine industry in the second quarter and six months ended June 29, 2025 decreased 1% and 2%, respectively, compared to the prior year 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 decreased 10% in the first quarter of 2025, compared to the prior year period.

We estimate that marine industry retail powerboat unit sales decreased 5% in the first quarter of 2025 compared to the prior year period, primarily due to the current macroeconomic environment faced by the end consumer, such as economic uncertainty and elevated interest rates.

According to Company estimates based on data published by the National Marine Manufacturers Association ("NMMA"), wholesale powerboat unit shipments decreased 5% and 7% in the second quarter and first six months of 2025, compared to the prior year periods.

We estimate that marine industry retail powerboat unit sales decreased 12% and 10% in the second quarter and first six months of 2025 compared to the prior year periods, primarily due to the current macroeconomic environment faced by the end consumer, such as economic uncertainty and elevated interest rates.

Powersports Industry

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We also participate in the motorcycle and golf cart segments of the market.

OEMs and dealers are actively managing field inventory levels to align with retail demand and in an effort to update units held in dealer inventories.

Net sales to the powersports industry comprised 8% and 9% of the Company's net sales in the first quarter ended March 30, 2025 and March 31, 2024, respectively.

Net sales to the powersports industry in the first quarter of 2025 decreased 2% compared to the prior year period.

OEMs and dealers are actively managing field inventory levels to align dealer inventories with retail demand.

Net sales to the powersports industry comprised 9% of the Company's net sales in both the second quarter and six months ended June 29, 2025 and 10% in both the second quarter and six months ended June 30, 2024.

Net sales to the powersports industry in the second quarter and six months ended June 29, 2025 decreased 7% and 5%, respectively, compared to the prior year periods.

Manufactured Housing ("MH") Industry

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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 "stick-built" housing, and any improvement in conditions in the asset-backed securities markets for manufactured housing loans.

Net sales to the MH industry comprised 17% and 16% of the Company's net sales in the first quarter ended March 30, 2025 and March 31, 2024, respectively.

Net sales to the MH industry in the first quarter ended March 30, 2025 increased 11% compared to the prior year period.

According to Company estimates based on industry data from the Manufactured Housing Institute, MH industry wholesale unit shipments increased 6% in the first quarter of 2025 compared to the prior year period, primarily driven by OEMs increasing production in first quarter of 2025 in anticipation of an increase in demand.

Net sales to the MH industry comprised 17% of the Company's net sales in both the second quarter and six months ended June 29, 2025 and 17% in both the second quarter and six months ended June 30, 2024.

Net sales to the MH industry in the second quarter and six months ended June 29, 2025 increased 4% and 8% respectively, compared to the prior year periods.

According to Company estimates based on industry data from the Manufactured Housing Institute, MH industry wholesale unit shipments increased 3% and 5% in the second quarter and first six months of 2025 compared to the prior year periods, primarily driven by OEMs increasing production in the first half of 2025 in anticipation of an increase in demand.

Industrial Market

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 12% and 13% of the Company's net sales in the first quarter ended March 30, 2025 and March 31, 2024, respectively.

Net sales to the industrial market in the first quarter ended March 30, 2025 increased 2% compared to the prior year period.

Net sales to the industrial market comprised 13% and 12% of the Company's net sales in the second quarter and six months ended June 29, 2025, respectively, and 13% in both the second quarter and six months ended June 30, 2024.

Net sales to the industrial market in both the second quarter and six months ended June 29, 2025 increased 2% compared to

the prior year periods.

Overall, our revenues in these markets are focused on residential and multifamily housing, hospitality, high-rise housing and office, commercial construction and institutional furniture markets.

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According to the U.S.

Census Bureau, combined new housing starts decreased 2% in the first quarter of 2025 compared to the prior year quarter, reflecting a decrease in single-family housing starts of 6%, partially offset by an increase in multifamily housing starts of 11%.

Census Bureau, combined new housing starts decreased 1% in the second quarter of 2025 compared to the prior year quarter, reflecting a decrease in single-family housing starts of 8%, partially offset by an increase in multifamily housing starts of 23%.

For the first six months of 2025, combined new housing starts decreased 1% compared to the prior year period, reflecting a decrease in single-family housing starts of 7%, partially offset by an increase in multifamily housing starts of 17%.

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.

RESULTS OF OPERATIONS

First Quarter Ended March 30, 2025 Compared to First Quarter Ended March 31, 2024

Second Quarter and Six Months Ended June 29, 2025 Compared to 2024

The following table sets forth the percentage relationship to net sales of certain items on the Company’s Condensed Consolidated Statements of Income.

First Quarter Ended

Second Quarter Ended

Amount Change % Change

($ in thousands) March 30, 2025 March 31, 2024

($ in thousands) June 29, 2025 June 30, 2024

Net sales $ 1,047,554 100.0 % $ 1,016,624 100.0 % $ 30,930 3 %

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Interest expense, net 18,869 1.8 % 20,343 2.0 % (1,474) (7) %

Other expenses 24,420 2.3 % — — % 24,420 N/A

Income taxes 10,997 1.0 % 16,462 1.6 % (5,465) (33) %

Net income $ 32,436 3.1 % $ 47,884 4.7 % $ (15,448) (32) %

Net sales in the first quarter of 2025 increased $69.9 million, or 7%, to $1.00 billion compared to $933.5 million in the first quarter of 2024.

Net sales in the first quarter of 2025 increased due to increased sales to the RV, MH and industrial markets, partially offset by decreased sales to the marine and powersports markets.

Sales to the RV market increased $57.9 million, or 14%, compared to the prior year quarter, primarily due to an increase in estimated wholesale shipments of approximately 14%.

Sales to the MH market increased $17.1 million, or 11%, compared to the prior year quarter, primarily due to an increase in estimated wholesale MH industry unit shipments of approximately 6%.

Sales to the industrial market increased $2.9 million, or 2%, compared to the prior year quarter, which is attributable to product mix shifts by certain customers.

Sales to the marine market decreased $6.3 million, or 4%, primarily attributable to a decrease in estimated powerboat wholesale units of 10% compared to the prior year quarter.

Sales to the powersports market decreased $1.7 million, or 2%, compared to the prior year quarter.

Revenue in the first quarter of 2025 attributable to acquisitions completed in the first quarter of 2025 was $4.3 million.

Revenue in the first quarter of 2024 attributable to acquisitions completed in the first three months of 2024 was $58.1 million.

Cost of goods sold increased $46.2 million, or 6%, to $774.8 million in the first quarter of 2025 compared to $728.6 million in the first quarter of 2024.

As a percentage of net sales, cost of goods sold decreased 90 basis points in the first quarter of 2025 to 77.2% compared to 78.1% in the first quarter of 2024.

The decrease in cost of goods sold as a percentage of net sales in the first quarter of 2025 primarily reflected a 60 basis point decrease in labor as a percentage of net sales, 20 basis point decrease in material as a percentage of net sales and 10 basis point decrease in overhead as a percentage of net sales.

Six Months Ended

Amount Change % Change

($ in thousands) June 29, 2025 June 30, 2024

Net sales $ 2,050,974 100.0 % $ 1,950,116 100.0 % $ 100,858 5 %

Cost of goods sold 1,571,751 76.6 % 1,513,967 77.6 % 57,784 4 %

Gross profit 479,223 23.4 % 436,149 22.4 % 43,074 10 %

Gross profit increased $23.7 million, or 12%, to $228.6 million in the first quarter of 2025 compared to $204.9 million in the prior year period.

As a percentage of net sales, gross profit increased 90 basis points to 22.8% in the first quarter of 2025 compared to 21.9% in the prior year period.

The increase in gross profit as a percentage of net sales in the first quarter of 2025 compared to the same period in 2024 reflects the impact of the factors discussed above under "Cost of Goods Sold".

Warehouse and delivery expenses 90,657 4.4 % 76,188 3.9 % 14,469 19 %

Warehouse and delivery expenses increased $7.1 million, or 19%, to $44.6 million in the first quarter of 2025 compared to $37.4 million in the first quarter of 2024.

As a percentage of net sales, warehouse and delivery expenses increased 40 basis points to 4.4% in first quarter of 2025 compared to 4.0% the first quarter of 2024.

The increase in warehouse and delivery expenses in the first quarter of 2025 compared to the same period in 2024 is primarily attributable to the increase in sales.

The increase in warehouse and delivery expenses as a percentage of net sales in the first quarter of 2025 compared to the same period in 2024 is primarily related to higher freight costs.

Selling, general and administrative expenses 187,137 9.1 % 168,834 8.7 % 18,303 11 %

Amortization of intangible assets 49,138 2.4 % 47,096 2.4 % 2,042 4 %

Operating income 152,291 7.4 % 144,031 7.4 % 8,260 6 %

Interest expense, net 37,981 1.9 % 40,433 2.1 % (2,452) (6) %

Other expenses 24,420 1.2 % — — % 24,420 N/A

Income taxes 19,216 0.9 % 20,621 1.1 % (1,405) (7) %

Net income $ 70,674 3.4 % $ 82,977 4.3 % $ (12,303) (15) %

Net sales in the second quarter of 2025 increased $30.9 million, or 3%, to $1.05 billion compared to $1.02 billion in the second quarter of 2024.

Net sales in the second quarter of 2025 increased due to increased sales to the RV, MH and industrial markets, partially offset by decreased sales to the powersports and marine markets.

Sales to the RV market increased $29.5 million, or 7%, compared to the prior year quarter, primarily attributable to the Company's acquisition of ICON Direct LLC, doing business as RecPro ("RecPro") in the third quarter of 2024.

Sales to the MH market increased $7.8 million, or 4%, compared to the prior year quarter, primarily due to an increase in estimated MH industry wholesale unit shipments of approximately 3%.

Sales to the industrial market increased $2.2 million, or 2%, compared to the prior year quarter, which is attributable to market share gains and product mix shifts by certain customers.

Sales to the powersports market decreased $7.5 million, or 7%, compared to the prior year quarter, primarily related to lower OEM production volumes in alignment with retail demand.

Sales to the marine market decreased $1.2 million, or 1%, primarily attributable to a decrease in estimated powerboat wholesale unit shipments of 5% compared to the prior year quarter.

Net sales in the first six months of 2025 increased $100.9 million, or 5%, to $2.05 billion from $1.95 billion in the first six months of 2024.

Net sales in the first six months of 2025 increased due to increased sales to the RV, MH and industrial markets, partially offset by decreased sales to the powersports and marine markets.

Sales to the RV market increased $87.4 million, or 10%, compared to the first six months of 2024, due to Company's acquisition of RecPro in the third quarter of 2024, industry volume growth and market share gain.

Sales to the MH market increased $24.9 million, or 8%, compared to the first six months of 2024, primarily due to an increase in estimated MH industry wholesale unit shipments of approximately 5%.

Sales to the industrial market increased $5.1 million, or 2%, compared to the first six months of 2024, primarily related to product mix shifts by certain customers.

Sales to the powersports market decreased $9.2 million, or 5%, compared to the first six months of 2024, primarily related to lower OEM production volumes in alignment with retail demand.

Sales to the marine market decreased $7.5 million, or 2%, compared to the first six months of 2024, primarily attributable to a decrease in estimated wholesale unit shipments of 7% compared to the first six months of 2024.

Revenue attributable to acquisitions completed in the first six months of 2025 was $8.9 million and $13.2 million in the second quarter and first six months of 2025, respectively.

Revenue attributable to acquisitions completed in the first six months of 2024 was $79.6 million and $137.7 million in the second quarter and first six months of 2024, respectively.

Cost of Goods Sold.

Cost of goods sold increased $11.6 million, or 1%, to $796.9 million in the second quarter of 2025 compared to $785.3 million in the second quarter of 2024.

As a percentage of net sales, cost of goods sold decreased 110 basis points in the second quarter of 2025 to 76.1% compared to 77.2% in the second quarter of 2024.

Cost of goods sold as a percentage of net sales decreased in the second quarter of 2025 primarily as a result of acquisitions completed in 2024 and 2025 which had a positive impact on material costs and labor, partially offset by increased manufacturing overhead costs resulting from different cost profiles of acquired businesses.

The decrease in costs of goods sold as a percentage of net sales in the second quarter of 2025 primarily reflected decreases in materials and labor costs of 90 and 40 basis points, respectively, partially offset by increased manufacturing overhead costs of 20 basis points.

Cost of goods sold increased $57.8 million, or 4%, to $1.6 billion in the first six months of 2025 from $1.51 billion in the first six months of 2024.

As a percentage of net sales, cost of goods sold decreased 100 basis points in the first six months of 2025 to 76.6% compared to 77.6% in the first six months of 2024.

Cost of goods sold as a percentage of net sales decreased in the first six months of 2025 primarily as a result of continued cost reduction and automation initiatives we deployed throughout 2024 and into 2025 that had a positive impact on material and labor costs.

The decrease in cost of goods sold as a percentage of net sales in the first six months of 2025 primarily reflected a 50 basis point decrease in material costs and a 50 basis point decrease in labor costs.

In general, the Company's cost of goods sold percentage can be impacted from quarter-to-quarter 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 $19.3 million, or 8%, to $250.6 million in the second quarter of 2025 compared to $231.3 million in the prior year period.

As a percentage of net sales, gross profit increased 110 basis points to 23.9% in the second quarter of 2025 compared to 22.8% in the prior year period.

Gross profit increased $43.1 million, or 10%, to $479.2 million in the first six months of 2025 compared to $436.1 million in the prior year period.

As a percentage of net sales, gross profit increased 100 basis points to 23.4% in the first six months of 2025 compared to 22.4% in the prior year period.

The increase in gross profit as a percentage of net sales in the second quarter and first six of 2025 compared to the same periods in 2024 reflects the impact of the factors discussed above under "Cost of Goods Sold".

Warehouse and Delivery Expenses .

Warehouse and delivery expenses increased $7.3 million, or 19%, to $46.1 million in the second quarter of 2025 compared to $38.7 million in the second quarter of 2024.

As a percentage of net sales, warehouse and delivery expenses increased 60 basis points to 4.4% in second quarter of 2025 compared to 3.8% the second quarter of 2024.

Warehouse and delivery expenses increased $14.5 million, or 19%, to $90.7 million in the first six months of 2025 compared to $76.2 million in the prior year period.

As a percentage of net sales, warehouse and delivery expenses increased 50 basis points to 4.4% in the first six months of 2025 compared to 3.9% in the first six months of 2024.

The increase in warehouse and delivery expenses in the second quarter and first six months of 2025 compared to the same periods in 2024 is primarily attributable to the increase in sales, and the increase as a percentage of net sales is primarily related to higher freight costs.

Selling, General and Administrative ("SG&A") Expenses .

SG&A expenses increased $8.7 million, or 10%, to $93.9 million in the first quarter of 2025 compared to $85.2 million in the prior year quarter.

The increase in SG&A expenses in the first quarter of 2025 compared to the prior year quarter is primarily related to increased wages, technology expenses, loss on sale of fixed assets, and insurance expenses, partially offset by decreased professional fees.

In the first quarter of 2025, SG&A expenses as a percentage of net sales increased 30 basis points to 9.4% compared to 9.1% in the first quarter of 2024.

SG&A expenses increased $9.6 million, or 12%, to $93.2 million in the second quarter of 2025 compared to $83.6 million in the prior year quarter.

The increase in SG&A expenses in the second quarter of 2025 compared to the prior year quarter is primarily related to increased wages, selling expenses, insurance expenses, and technology expenses, partially offset by decreased incentive compensation.

As a percentage of net sales, SG&A expenses increased 70 basis points to 8.9% in the second quarter of 2025 compared to 8.2% in the second quarter of 2024.

The increase in SG&A expenses as a percentage of net sales in the second quarter of 2025 is primarily attributable to increased wages and selling expenses as a percentage of net sales, partially offset by decreased incentive compensation as a percentage of net sales.

SG&A expenses increased $18.3 million, or 11%, to $187.1 million in the first six months of 2025 compared to $168.8 million in the prior year period.

The increase in SG&A expenses in the first six months of 2025 compared to 2024 is primarily attributable to increased wages, insurance expenses, technology expenses, loss on sale of assets, and selling expenses, partially offset by decreased incentive compensation expenses.

As a percentage of net sales, SG&A expenses increased 40 basis points to 9.1% in the first six months of 2025 compared to 8.7% in the prior year period.

The increase in SG&A expenses as a percentage of net sales in the first six months of 2025 is primarily attributable to increased wages, insurance expenses, technology expenses, loss on sale of assets, and selling expenses, partially offset by decreased professional fees and incentive compensation expenses.

Amortization of Intangible Assets.

Amortization of intangible assets increased $1.7 million, or 7%, to $24.5 million in the first quarter of 2025 compared to $22.8 million in the prior year quarter, primarily reflecting the impact of the acquisitions completed in 2024.

Amortization of intangible assets increased $0.4 million, or 1%, to $24.6 million in the second quarter of 2025 compared to $24.3 million in the prior year quarter.

Amortization of intangible assets increased $2.0 million, or 4%, to $49.1 million in the first six months of 2025 compared to $47.1 million in the prior year period.

The increases in the second quarter and first six months of 2025 compared to the comparable prior year periods primarily reflect the impact of the RecPro acquisition as well as other acquisitions completed in 2025 and 2024.

Operating Income.

Operating income increased $6.3 million, or 10%, to $65.6 million in the first quarter of 2025 compared to $59.3 million in the first quarter of 2024.

As a percentage of net sales, operating income increased 10 basis points to 6.5% in the first quarter of 2025 compared to 6.4% in the same period in 2024.

Operating income increased $2.0 million, or 2%, to $86.7 million in the second quarter of 2025 compared to $84.7 million in the second quarter of 2024.

As a percentage of net sales, operating income remained flat at 8.3% the second quarter of 2025 compared to the second quarter of 2024.

The increase in operating income is primarily attributable to increased net sales and the items discussed above.

The increase to operating income as a percentage of net sales is primarily attributable to the items discussed above.

For the first six months of 2025, operating income increased $8.3 million, or 6%, to $152.3 million from $144.0 million in the first six months of 2024.

Operating income as a percentage of net sales remained flat at 7.4% in the first six months of 2025 compared to the first six months of 2024.

The increase in operating income is primarily attributable to increased net sales and the items discussed above.

Interest Expense, Net.

Interest expense decreased $1.0 million, or 5%, to $19.1 million in the first quarter of 2025 compared to $20.1 million in the prior year quarter.

The decrease primarily reflects a lower average interest rate on our outstanding debt compared to the prior year quarter.

Interest expense decreased $1.5 million, or 7%, to $18.9 million in the second quarter of 2025 compared to $20.3 million in the prior year quarter.

Interest expense decreased $2.5 million, or 6%, to $38.0 million in the first six months of 2025 compared to $40.4 million in the first six months of 2024.

The decrease primarily reflects a lower average interest rate on our outstanding debt compared to the prior year periods.

Other Expenses.

Other expenses were $24.4 million in both the second quarter and first six months of 2025 compared to zero in the prior year periods.

Other expenses in the second quarter and first six months of 2025 reflects expenses related to a legal settlement.

Income Taxes.

Income tax expense increased $4.0 million in the first quarter of 2025 to $8.2 million compared to $4.2 million in the prior year quarter.

The effective tax rate was 17.7% in the first quarter of 2025 and 10.6% in the first quarter of 2024.

The increase in income tax expense in the first quarter of 2025 compared to the same period in 2024 is primarily related to decreased excess tax benefits on share-based compensation and an increase in income before taxes.

Income tax expense decreased $5.5 million in the second quarter of 2025 to $11.0 million compared to $16.5 million in the prior year quarter.

Income tax expense decreased $1.4 million in the first six months of 2025 to $19.2 million compared to $20.6 million in the prior year period.

The effective tax rate was 25.3% and 21.4% in the second quarter and first six months of 2025, respectively, and 25.6% and 19.9% in the second quarter and first six months of 2024, respectively.

The decrease in income tax expense in the second quarter and the first six months of 2025 compared to the same periods in 2024 is primarily related to decrease in income before taxes.

SEGMENT REPORTING

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The Company does not measure profitability at the customer end market (RV, marine, powersports, MH and industrial) level.

First Quarter Ended March 30, 2025 Compared to 2024

Second Quarter and Six Months Ended June 29, 2025 Compared to 2024

In the discussion that follows, sales attributable to the Company’s reportable segments include inter-segment sales and gross profit includes the impact of inter-segment operating activity.

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A reconciliation of consolidated net sales and operating income is presented in Note 11 "Segment Information" of the Notes to Condensed Consolidated Financial Statements.

First Quarter Ended Amount Change % Change

($ in thousands) March 30, 2025 March 31, 2024

Second Quarter Ended

Amount Change % Change

($ in thousands) June 29, 2025 June 30, 2024

Manufacturing $ 776,520 $ 774,231 $ 2,289 —%

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Distribution $ 32,418 $ 30,158 $ 2,260 7%

Six Months Ended

Amount Change % Change

($ in thousands) June 29, 2025 June 30, 2024

Manufacturing $ 1,531,007 $ 1,488,741 $ 42,266 3%

Manufacturing segment sales increased $40.0 million, or 6%, to $754.5 million in the first quarter of 2025 compared to $714.5 million in the prior year quarter.

The manufacturing segment accounted for approximately 75% of the Company’s sales for both the first quarter of 2025 and 2024.

Manufacturing segment sales in the first quarter of 2025 compared to the prior year quarter increased due to increased sales to the RV, MH, and industrial markets, partially offset by decreased sales to the marine and powersports markets.

Sales to the RV market increased 19%, primarily attributable to an increase in estimated wholesale units of 14% compared to the prior year quarter.

Sales to the MH market increased 10% compared to the prior year quarter, primarily due to an increase in estimated wholesale MH industry unit shipments of approximately 6%.

Distribution $ 531,574 $ 503,739 $ 27,835 6%

Manufacturing $ 348,679 $ 334,918 $ 13,761 4%

Distribution $ 133,875 $ 108,189 $ 25,686 24%

Operating Income

Manufacturing $ 201,244 $ 196,202 $ 5,042 3%

Distribution $ 57,418 $ 53,878 $ 3,540 7%

Manufacturing

Manufacturing segment sales increased $2.3 million, or less than 1%, to $776.5 million in the second quarter of 2025 compared to $774.2 million in the prior year quarter.

For the first six months of 2025, sales increased $42.3 million, or 3%, to $1.53 billion compared to $1.49 billion in the prior year period.

The manufacturing segment accounted for approximately 74% of the Company’s sales for both the second quarter of 2025 and 2024, and 74% and 75% of the Company's sales for the first six months of 2025 and 2024, respectively.

Manufacturing segment sales in the second quarter of 2025 compared to the prior year quarter increased due to increased sales to the RV, MH and industrial markets, partially offset by decreased sales to the powersports and marine markets.

Sales to the RV market increased 7%, primarily attributable to market share gains.

Sales to the MH market increased 5% compared to the prior year quarter, primarily due to an increase in estimated MH industry wholesale unit shipments of approximately 3% and market share gains.

Sales to the industrial market increased 1% compared to the prior year quarter.

Sales to the powersports market decreased 9% compared to the prior year quarter, primarily related to lower OEM production volumes in alignment with retail demand.

Sales to the marine market decreased 1%, primarily attributable to a decrease in estimated powerboat wholesale unit shipments of 5% compared to the prior year quarter.

Sales to the powersports market decreased 3% compared to the prior year quarter.

Manufacturing segment sales in the first quarter of 2025 attributable to acquisitions completed in the first quarter of 2025 were $4.3 million.

Manufacturing segment sales in the first quarter of 2024 attributable to acquisitions completed in the first quarter of 2024 were $ 58.1 million.

Manufacturing segment sales in the first six months of 2025 compared to the same prior year period increased due to increased sales to the RV, MH, and industrial markets, partially offset by decreased sales to the powersports and marine markets.

Sales to the RV market increased 13% compared to the first six months of 2024, primarily attributable to an increase in estimated wholesale units shipments of 7% and market share gains compared to the first six months of 2024.

Sales to the MH market increased 7% compared to the first six months of 2024, primarily due to an increase in estimated MH industry wholesale unit shipments of approximately 5% and market share gains.

Sales to the industrial market increased 1% compared to the first six months of 2024.

Sales to the powersports market decreased 6% compared to the first six months of 2024, primarily related to lower OEM production volumes in alignment with retail demand.

Sales to the marine market decreased 3% compared to the first six months of 2024, primarily attributable to a decrease in estimated wholesale unit shipments of 7%, partially offset by acquisitions completed in 2024 and 2025.

Manufacturing segment sales attributable to acquisitions completed in the first six months of 2025 were $8.9 million and $13.2 million in the second quarter and first six months of 2025, respectively.

Manufacturing segment sales attributable to acquisitions completed in the first six months of 2024 were $79.6 million and $137.7 million in the second quarter and first six months of 2024, respectively.

Gross Profit .

Manufacturing segment gross profit increased $12.7 million, or 8%, to $169.4 million in the first quarter of 2025 compared to $156.7 million in the first quarter of 2024.

As a percentage of sales, gross profit increased 60 basis points to 22.5% in the first quarter of 2025 compared to 21.9% in the prior year quarter.

The increase in gross profit as a percentage of sales in the first quarter of 2025 compared to the same quarter in 2024 is attributable to decreased labor and manufacturing costs as a percentage of sales, partially offset by increased material costs as a percentage of sales.

Manufacturing segment gross profit increased $0.5 million, or less than 1%, to $179.3 million in the second quarter of 2025 compared to $178.7 million in the second quarter of 2024.

Gross profit as a percentage of sales was 23.1% in the second quarter of 2025 and flat compared to the prior year quarter.

Manufacturing segment gross profit increased $13.8 million, or 4%, to $348.7 million in the first six months of 2025 compared to $334.9 million in the first six months of 2024.

As a percentage of sales, gross profit increased 30 basis points to 22.8% in the first six months of 2025 compared to 22.5% in the prior year period.

The increase in gross profit as a percentage of sales in the first six months of 2025 compared to the same period in 2024 is attributable to decreased labor costs as a percentage of sales, partially offset by increased material costs as a percentage of sales.

Operating Income.

Operating income increased $10.7 million, or 12%, to $98.1 million in the first quarter of 2025 compared to $87.5 million in the prior year quarter.

The overall increase in operating income in the first quarter of 2025 primarily reflects the items discussed above.

Distribution segment sales increased $15.6 million, or 7%, to $254.1 million in the first quarter of 2025 compared to $238.5 million in the prior year quarter.

This segment accounted for approximately 25% of the Company’s sales for both the first quarter of 2025 and 2024.

Distribution segment sales in the first quarter of 2025 compared to the first quarter of 2024 increased due to increased sales to each of our markets.

Sales to the MH market increased 12% compared to the prior year quarter, primarily due to an increase in estimated wholesale MH industry unit shipments of approximately 6%.

Sales to the RV market increased 3% compared to the prior year quarter.

Sales to the industrial market increased 17% compared to the prior year quarter.

Sales to the marine market increased 4% compared to the prior year quarter, primarily attributable to product mix shifts by certain customers.

Sales to the powersports market increased 37% compared to the prior year quarter, primarily attributable to product mix shifts by certain customers.

Operating income decreased $5.6 million, or 5%, to $103.1 million in the second quarter of 2025 compared to $108.8 million in the prior year quarter.

As a percentage of sales, operating income decreased 70 basis points to 13.3% in the second quarter of 2025 compared to 14.0% in the same period in 2024.

The decrease in operating income and operating income as a percentage of sales is primarily related to the items discussed above combined with an increase in operating expenses and operating expenses as a percentage of sales.

Operating income increased $5.0 million, or 3%, to $201.2 million in the first six months of 2025 compared to $196.2 million in the prior year period.

As a percentage of sales, operating income decreased 10 basis points to 13.1% in the first six months of 2025 compared to 13.2% in the same period in 2024.

The increase in operating income is primarily attributable to increased sales, 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.

Distribution segment sales increased $12.3 million, or 5%, to $277.5 million in the second quarter of 2025 compared to $265.2 million in the prior year quarter.

For the first six months of 2025, sales increased $27.8 million, or 6%, to $531.6 million compared to $503.7 million in the prior year period.

The distribution segment accounted for approximately 26% of the Company’s sales for both the second quarter of 2025 and 2024, and 26% and 25% of the Company's sales for the first six months of 2025 and 2024, respectively.

Distribution segment sales in the second quarter of 2025 compared to the second quarter of 2024 increased due to increased sales to the RV, MH, powersports, and industrial markets, partially offset by decreased sales to the marine market.

Sales to the RV market increased 5% compared to the prior year quarter, primarily attributable to market share gains and acquisitions completed in 2024.

Sales to the MH market increased 4% compared to the prior year quarter, primarily due to an increase in estimated MH industry wholesale unit shipments of approximately 3%.

Sales to the powersports market increased $1.2 million, or 33%, compared to the prior year quarter, primarily attributable to market share gains and acquisitions completed in 2024.

Sales to the industrial market increased $0.7 million, or 7%, compared to the prior year quarter.

Sales to the marine market decreased $0.2 million, or 2%, compared to the prior year quarter.

Distribution segment sales in the first six months of 2025 compared to the first six months of 2024 increased due to increased sales in each of our markets.

Sales to the MH market increased 8% compared to the first six months of 2024, primarily due to an increase in estimated MH industry wholesale unit shipments of approximately 5%.

Sales to the RV market increased 4% compared to the first six months of 2024, due to industry wholesale unit shipment growth.

Sales to the powersports market increased $2.2 million, or 35%, compared to the first six months of 2024, primarily attributable to market share gains and acquisitions completed in 2024.

Sales to the industrial market increased $2.0 million, or 11%, compared to the first six months of 2024.

Sales to the marine market increased 1% compared to the first six months of 2024.

Gross Profit.

Distribution segment gross profit increased $11.6 million, or 23%, to $61.7 million in the first quarter of 2025 compared to $50.1 million in the first quarter of 2024.

As a percentage of sales, gross profit increased 330 basis points to 24.3% in the first quarter of 2025 compared to 21.0% in the prior year quarter.

The increase in gross profit as a percentage of sales in the first quarter of 2025 compared to the same quarter in 2024 is attributable to decreased labor and material costs as a percentage of sales.

Distribution segment gross profit increased $14.0 million, or 24%, to $72.2 million in the second quarter of 2025 compared to $58.1 million in the second quarter of 2024.

As a percentage of sales, gross profit increased 410 basis points to 26.0% in the second quarter of 2025 compared to 21.9% in the prior year quarter.

The increase in gross profit as a percentage of sales in the second quarter of 2025 compared to the same quarter in 2024 is attributable to decreased material and labor costs as a percentage of sales.

Distribution segment gross profit increased $25.7 million, or 24%, to $133.9 million in the first six months of 2025 compared to $108.2 million in the first six months of 2024.

As a percentage of sales, gross profit increased 370 basis points to 25.2% in the first six months of 2025 compared to 21.5% in the prior year period.

The increase in gross profit as a percentage of sales in the first six months of 2025 compared to 2024 is attributable to decreased material and labor costs as a percentage of sales.

Operating Income.

Operating income increased $1.3 million, or 5%, to $25.0 million in the first quarter of 2025 compared to $23.7 million in the prior year quarter.

The increase in operating income in the first quarter of 2025 primary reflects the impact of the items discussed above.

Operating income increased $2.3 million, or 7%, to $32.4 million in the second quarter of 2025 compared to $30.2 million in the prior year quarter.

As a percentage of sales, operating income increased 30 basis points to 11.7% in the second quarter of 2025 compared to 11.4% in the same period in 2024.

The increase in operating income and operating income as a percentage of sales is primarily related to the items discussed above, partially offset by an increase in operating expenses and operating expense as a percentage of sales.

Operating income increased $3.5 million, or 7%, to $57.4 million in the first six of 2025 compared to $53.9 million in the prior year period.

As a percentage of sales, operating income increased 10 basis points to 10.8% in the first six months of 2025 compared to 10.7% in the same period in 2024.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity are cash flows from operation, available cash reserves and borrowing capacity available under the revolving credit and term loan facility (the “2024 Credit Facility”), as discussed in Note 8 "Debt" of the Notes to Condensed Consolidated Financial Statements.

Our liquidity as of March 30, 2025 consisted of cash and cash equivalents of $86.6 million and $658.0 million of availability under the 2024 Credit Facility, net of $7.0 million of outstanding letters of credit.

As of March 30, 2025, the Company's existing cash and cash equivalents, cash generated from operations, and available borrowings under the 2024 Credit Facility are expected to be sufficient to meet anticipated cash needs for working capital and capital expenditures for at least the next 12 months, exclusive of any acquisitions, based on the Company's current cash flow budgets and forecast of short-term and long-term liquidity needs.

Our liquidity as of June 29, 2025 consisted of cash and cash equivalents of $22.0 million and $813.0 million of availability under the 2024 Credit Facility, net of $7.0 million of outstanding letters of credit.

As of June 29, 2025, the Company's existing cash and cash equivalents, cash generated from operations, and available borrowings under the 2024 Credit Facility are expected to be sufficient to meet anticipated cash needs for working capital and capital expenditures for at least the next 12 months, exclusive of any acquisitions, based on the Company's current cash flow budgets and forecast of short-term and long-term liquidity needs.

Principal uses of cash are to support working capital demands, meet debt service requirements and support the Company's capital allocation strategy, which includes acquisitions, capital expenditures, dividends and repurchases of the Company’s common stock, among others.

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The Company will continue to assess its liquidity position and potential sources of supplemental liquidity in view of operating performance, current economic and capital market conditions, and other relevant circumstances.

In the first three months of 2025, the Company utilized available borrowing capacity under the Revolver due 2029 and cash on hand to fund two acquisitions, as discussed in Note 5 "Acquisitions" of the Notes to Condensed Consolidated Financial Statements.

As of and for the reporting period ended March 30, 2025, the Company was in compliance with its financial covenants as required under the terms of the credit agreement that established the 2024 Credit Facility (the “2024 Credit Agreement”).

The required maximum consolidated secured net leverage ratio and the required minimum consolidated interest coverage ratio, as such ratios are defined in the 2024 Credit Agreement, compared to the actual amounts as of March 30, 2025 and for the fiscal period then ended are as follows:

In the first six months of 2025, the Company utilized available borrowing capacity under the Revolver due 2029 and cash on hand to fund two acquisitions, as discussed in Note 5 "Acquisitions" of the Notes to Condensed Consolidated Financial Statements.

As of and for the reporting period ended June 29, 2025, the Company was in compliance with its financial covenants as required under the terms of the credit agreement that established the 2024 Credit Facility (the “2024 Credit Agreement”).

The required maximum consolidated secured net leverage ratio and the required minimum consolidated interest coverage ratio, as such ratios are defined in the 2024 Credit Agreement, compared to the actual amounts as of June 29, 2025 and for the fiscal period then ended are as follows:

Required Actual

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Consolidated interest coverage ratio (12-month period) 3.00 6.62

In addition, as of March 30, 2025, the Company's consolidated total net leverage ratio (12-month period) was 2.74.

In addition, as of June 29, 2025, the Company's consolidated total net leverage ratio (12-month period) was 2.65.

While this ratio is not a covenant under the 2024 Credit Agreement, it is used in determining the applicable borrowing margin under the 2024 Credit Agreement.

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Cash flows from operating activities are one of the Company's primary sources of liquidity, representing the net income the Company earned in the reported periods, adjusted for certain non-cash items and changes in operating assets and liabilities.

Net cash provided by operating activities increased $4.9 million, or 14%, to $40.1 million in the first three months of 2025 compared to $35.2 million in the first three months of 2024.

The increase in operating cash flows is primarily attributable to a $5.0 million decrease in operating assets and liabilities, net of business acquisitions, as a use of cash, increased net income, depreciation and amortization, and losses on sale of property plant and equipment of $3.1 million, $2.3 million and $2.0 million, respectively, partially offset by decreased deferred income taxes of $5.7 million compared to the first three months of 2024.

Net cash provided by operating activities increased $16.8 million, or 10%, to $189.5 million in the first six months of 2025 compared to $172.7 million in the first six months of 2024.

The increase in operating cash flows is primarily attributable to a $27.7 million source of cash from operating assets and liabilities, net of business acquisitions compared to a $3.3 million use of cash in the prior year period, partially offset by a $12.3 million decrease in net income and a $7.8 million decrease in deferred income taxes compared to the first six months of 2024.

Investing Activities:

Net cash used in investing activities decreased $304.6 million to $66.1 million in the first three months of 2025 compared to $370.7 million in the first three months of 2024 due to a decrease in cash used in business acquisitions, which were $47.6 million in the three months of 2025 compared to $329.6 million in the first three months of 2024, primarily due to the acquisition of Sportech in January 2024.

Net cash used in investing activities decreased $300.2 million to $86.6 million in the first six months of 2025 compared to $386.8 million in the first six months of 2024 due to a decrease in cash used in business acquisitions, which were $48.1 million in the first six months of 2025 compared to $330.7 million in the first six months of 2024, primarily due to the acquisition of Sportech in January 2024.

Financing Activities:

Net cash provided by financing activities was $79.0 million in the first three months of 2025 compared to $341.7 million in the first three months of 2024, primarily due to a decrease in net borrowings under our revolving credit facility of $265 million, to $110.0 million in the first three months of 2025 from $375.0 million in the first three months of 2024.

Net cash used in financing activities was $114.4 million in the first six months of 2025 compared to $246.7 million of net cash provided by financing activities in the first six months of 2024, primarily due to an increase in net repayments under our revolving credit facility of $45.0 million in the first six months of 2025 compared to net borrowings of $295.0 million in the first six months of 2024.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 1, “Basis of Presentation and Significant Accounting Policies” to the accompanying Condensed Consolidated Financial Statements in Item 1.

See Note 1, “Basis of Presentation and Significant Accounting Policies” to the accompanying Condensed Consolidated Financial Statements.

CRITICAL ACCOUNTING POLICIES

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Accordingly, the Company’s sales and profits had generally been the highest in the second quarter and lowest in the fourth quarter.

Seasonal industry trends in the past several years have included the impact related to the addition of major RV manufacturer open houses for dealers in the August-September

timeframe and marine open houses in the December-February timeframe, resulting in dealers delaying certain restocking purchases until new product lines are introduced at these shows.

Seasonal industry trends in the past several years have included the impact related to the addition of major RV manufacturer open houses for dealers in the August-September timeframe and marine open houses in the December-February timeframe, resulting in dealers delaying certain restocking purchases until new product lines are introduced at these shows.

In addition, recent seasonal industry trends have been, and future trends may be, different than in prior years due to volatile economic conditions, interest rates, access to financing, cost of fuel, national and regional economic conditions and consumer confidence on retail sales of RVs, powersports and marine units and other products for which the Company sells its components, as well as fluctuations in RV, powersports and marine dealer inventories, increased volatility in demand from RV, powersports and marine dealers, the timing of dealer orders, and from time to time, the impact of severe weather conditions on the timing of industry-wide wholesale shipments.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis