PATRICK INDUSTRIES INC 10-Q

ITEM 1. FINANCIAL STATEMENTS PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Second Quarter Ended Six Months Ended ($ and shares in thousands, except per share data) June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Net sales $ 1,047,554 $ 1,016,624 $ 2,050,974 $ 1,950,116 Cost of goods sold 796,922 785,330 1,571,751 1,513,967 Gross profit 250,632 231,294 479,223 436,149 Operating expenses: Warehouse and delivery 46,075 38,739 90,657 76,188 Selling, general and administrative 93,206 83,588 187,137 168,834 Amortization of intangible assets 24,629 24,278 49,138 47,096 Total operating expenses 163,910 146,605 326,932 292,118 Operating income 86,722 84,689 152,291 144,031 Interest expense, net 18,869 20,343 37,981 40,433 Other expenses 24,420 — 24,420 — Income before income taxes 43,433 64,346 89,890 103,598 Income taxes 10,997 16,462 19,216 20,621 Net income $ 32,436 $ 47,884 $ 70,674 $ 82,977 Basic earnings per common share (1) $ 1.00 $ 1.47 $ 2.17 $ 2.55 Diluted earnings per common share (1) $ 0.96 $ 1.44 $ 2.07 $ 2.50 Weighted average shares outstanding – Basic (1) 32,520 32,586 32,595 32,533 Weighted average shares outstanding – Diluted (1) 33,823 33,254 34,116 33,187 (1) The prior year periods reflect the impact of the three-for-two stock split paid in December 2024. See Note 1 "Basis of Presentation and Significant Accounting Policies" for further details. See accompanying Notes to Condensed Consolidated Financial Statements. 3 Table of Contents PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Second Quarter Ended Six Months Ended ($ in thousands) June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Net income $ 32,436 $ 47,884 $ 70,674 $ 82,977 Other comprehensive (loss) income, net of tax: Foreign currency translation (loss) gain ( 6 ) 3 ( 2 ) ( 29 ) Total other comprehensive (loss) income ( 6 ) 3 ( 2 ) ( 29 ) Comprehensive income $ 32,430 $ 47,887 $ 70,672 $ 82,948 See accompanying Notes to Condensed Consolidated Financial Statements. 4 Table of Contents PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ($ in thousands) June 29, 2025 December 31, 2024 ASSETS Current Assets: Cash and cash equivalents $ 21,974 $ 33,561 Trade and other receivables, net 270,135 178,206 Inventories 554,631 551,617 Prepaid expenses and other 53,218 59,233 Total current assets 899,958 822,617 Property, plant and equipment, net 406,871 384,903 Operating lease right-of-use assets 190,588 200,697 Goodwill 801,785 797,236 Intangible assets, net 766,309 802,889 Other non-current assets 13,701 12,612 Total assets $ 3,079,212 $ 3,020,954 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Current maturities of long-term debt $ 6,250 $ 6,250 Current operating lease liabilities 55,186 53,697 Accounts payable 284,510 187,915 Accrued liabilities 114,376 105,753 Total current liabilities 460,322 353,615 Long-term debt, less current maturities, net 1,266,298 1,311,684 Long-term operating lease liabilities 139,686 151,026 Deferred tax liabilities, net 53,564 61,346 Other long-term liabilities 16,233 14,917 Total liabilities 1,936,103 1,892,588 Shareholders' equity Preferred shares, no par value per share, 1,000,000 shares authorized, none issued and outstanding — — Common stock, no par value per share, 60,000,000 shares authorized, 33,278,676 and 33,567,048 issued and outstanding as of June 29, 2025 and December 31, 2024, respectively 202,765 202,353 Accumulated other comprehensive loss ( 928 ) ( 926 ) Retained earnings 941,272 926,939 Total shareholders' equity 1,143,109 1,128,366 Total liabilities and shareholders' equity $ 3,079,212 $ 3,020,954 See accompanying Notes to Condensed Consolidated Financial Statements. 5 Table of Contents PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended ($ in thousands) June 29, 2025 June 30, 2024 Cash flows from operating activities Net income $ 70,674 $ 82,977 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 85,255 81,816 Stock-based compensation expense 11,300 9,742 Deferred income taxes ( 7,782 ) — Amortization of deferred debt financing costs 1,611 1,613 Loss (gain) on sale of property, plant and equipment 2,094 ( 368 ) Other ( 1,422 ) 174 Change in operating assets and liabilities, net of acquisitions of businesses: Trade and other receivables, net ( 88,883 ) ( 65,089 ) Inventories 4,655 28,276 Prepaid expenses and other assets 4,493 ( 1,862 ) Accounts payable, accrued liabilities and other 107,472 35,379 Net cash provided by operating activities 189,467 172,658 Cash flows from investing activities Purchases of property, plant and equipment ( 38,446 ) ( 32,411 ) Proceeds from sale of property, plant and equipment 1,832 2,114 Business acquisitions, net of cash acquired ( 48,140 ) ( 330,727 ) Other investing activities ( 1,864 ) ( 25,789 ) Net cash used in investing activities ( 86,618 ) ( 386,813 ) Cash flows from financing activities Term debt repayments ( 1,563 ) ( 3,750 ) Borrowings on revolver 345,536 875,055 Repayments on revolver ( 390,536 ) ( 580,055 ) Stock repurchases under buyback program ( 31,969 ) — Cash dividends paid to shareholders ( 26,951 ) ( 25,047 ) Taxes paid for share-based payment arrangements ( 8,611 ) ( 14,883 ) Payment of contingent consideration from business acquisitions ( 33 ) ( 4,560 ) Proceeds from exercise of common stock options — 21 Other financing activities ( 309 ) ( 75 ) Net cash (used in) provided by financing activities ( 114,436 ) 246,706 Net (decrease) increase in cash and cash equivalents ( 11,587 ) 32,551 Cash and cash equivalents at beginning of year 33,561 11,409 Cash and cash equivalents at end of period $ 21,974 $ 43,960 See accompanying Notes to Condensed Consolidated Financial Statements. 6 Table of Contents PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) Second Quarter Ended June 29, 2025 ($ in thousands) Common Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at March 30, 2025 $ 198,408 $ ( 922 ) $ 943,782 $ 1,141,268 Net income — — 32,436 32,436 Dividends declared — — ( 13,164 ) ( 13,164 ) Other comprehensive income, net of tax — ( 6 ) — ( 6 ) Stock repurchases under buyback program ( 1,676 ) — ( 21,782 ) ( 23,458 ) Repurchase of shares for tax payments related to the vesting and exercising of share-based grants ( 18 ) — — ( 18 ) Stock-based compensation expense 6,051 — — 6,051 Balance at June 29, 2025 $ 202,765 $ ( 928 ) $ 941,272 $ 1,143,109 Second Quarter Ended June 30, 2024 ($ in thousands) Common Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at March 31, 2024 $ 193,930 $ ( 1,031 ) $ 865,637 $ 1,058,536 Net income — — 47,884 47,884 Dividends declared — — ( 12,127 ) ( 12,127 ) Other comprehensive income, net of tax — 3 — 3 Repurchase of shares for tax payments related to the vesting and exercising of share-based grants ( 95 ) — — ( 95 ) Issuance of shares upon exercise of common stock options 21 — — 21 Stock-based compensation expense 4,282 — — 4,282 Balance at June 30, 2024 $ 198,138 $ ( 1,028 ) $ 901,394 $ 1,098,504 See accompanying Notes to Condensed Consolidated Financial Statements. 7 Table of Contents PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Continued) Six Months Ended June 29, 2025 ($ in thousands) Common Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at December 31, 2024 $ 202,353 $ ( 926 ) $ 926,939 $ 1,128,366 Net income — — 70,674 70,674 Dividends declared — — ( 26,649 ) ( 26,649 ) Other comprehensive loss, net of tax — ( 2 ) — ( 2 ) Stock repurchases under buyback program ( 2,277 ) — ( 29,692 ) ( 31,969 ) Repurchases of shares for tax payments related to the vesting and exercise of share-based grants ( 8,611 ) — — ( 8,611 ) Stock-based compensation expense 11,300 — — 11,300 Balance at June 29, 2025 $ 202,765 $ ( 928 ) $ 941,272 $ 1,143,109 Six Months Ended June 30, 2024 ($ in thousands) Common Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at December 31, 2023 $ 203,258 $ ( 999 ) $ 843,078 $ 1,045,337 Net income — — 82,977 82,977 Dividends declared — — ( 24,661 ) ( 24,661 ) Other comprehensive loss, net of tax — ( 29 ) — ( 29 ) Repurchases of shares for tax payments related to the vesting and exercise of share-based grants ( 14,883 ) — — ( 14,883 ) Issuance of shares upon exercise of common stock options 21 — — 21 Stock-based compensation expense 9,742 — — 9,742 Balance at June 30, 2024 $ 198,138 $ ( 1,028 ) $ 901,394 $ 1,098,504 See accompanying Notes to Condensed Consolidated Financial Statements. 8 Table of Contents PATRICK INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Patrick Industries, Inc. (“Patrick”, the “Company”, "we", "our") contain all adjustments (consisting of normal recurring adjustments) that we believe are necessary to present fairly the Company’s financial position as of June 29, 2025 and December 31, 2024, its results of operations for the second quarter and six months ended June 29, 2025 and June 30, 2024, and its cash flows for the six months ended June 29, 2025 and June 30, 2024. Patrick's unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The accompanying unaudited condensed consolidated financial statements for Patrick do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to Patrick’s Audited Consolidated Financial Statements and corresponding notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025. The Company maintains its financial records on the basis of a fiscal year ending on December 31, with the fiscal quarters spanning approximately thirteen weeks. The first quarter ends on the Sunday closest to the end of the first thirteen-week period. The second and third quarters are thirteen weeks in duration and the fourth quarter is the remainder of the year. The second quarter of fiscal year 2025 ended on June 29, 2025, and the second quarter of fiscal year 2024 ended on June 30, 2024. Earnings Per Common Share Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income available for diluted shares by the weighted-average number of common shares outstanding, plus the weighted-average impact of potentially dilutive convertible notes and warrants, plus the dilutive effect of stock options, stock appreciation rights ("SARs"), and certain restricted stock awards (collectively, “Common Stock Equivalents”). The dilutive effect of Common Stock Equivalents is calculated under the treasury stock method using the average market price for the period. Common Stock Equivalents are not included in the computation of diluted earnings per common share if their effect would be anti-dilutive. On November 18, 2024, the Company's Board of Directors (the "Board") declared a three-for-two stock split of the Company's common stock, to be effected in the form of a stock dividend. Shareholders of record as of the close of business on November 29, 2024 received one additional share for every two shares held which was paid on December 13, 2024. The Company's common stock began trading on a post-split basis on December 16, 2024. Cash paid in lieu of fractional shares was immaterial. All share and per share information has been updated on a retrospective basis for all periods presented. See Note 7 "Earnings Per Common Share" for the calculation of both basic and diluted earnings per common share. Summary of Significant Accounting Policies A summary of significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025. 9 Table of Contents Major Customer Concentration The Company had two major customers that accounted for the following consolidated net sales for the second quarter and six months ended June 29, 2025 and June 30, 2024: Second Quarter Ended Six Months Ended June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Percentage of total net sales: Customer 1 14 % 15 % 15 % 16 % Customer 2 14 % 14 % 15 % 14 % The Company had one major customers that accounted for the following trade receivables as of June 29, 2025 and December 31, 2024: As of June 29, 2025 December 31, 2024 Percentage of trade receivables, net: Customer 2 11 % 8 % New Accounting Standards Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were either assessed and determined to be not applicable or are expected to have an immaterial impact on the Company’s unaudited condensed consolidated financial statements. Recently Issued Accounting Pronouncements Accounting Standards Not Yet Adopted In January 2025, the FASB issued ASU 2025-01 , "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date". This update revises the effective date of ASU 2024-03 to clarify that the guidance is to be adopted by all public entities for annual reporting periods beginning after December 15, 2026 and for interim periods within annual reporting periods beginning after December 15, 2027. The intent of this update is to prevent non-calendar year-end entities from concluding that the initial adoption is required to be in an interim reporting period, rather than an annual reporting period. In November 2024, the FASB issued ASU 2024-04 , "Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments". The amendments in this update are intended to clarify disclosure requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions rather than as debt extinguishments. This ASU is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of ASU 2024-04 will have on the Company's consolidated financial statements. In November 2024, the FASB issued ASU 2024-03 , "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses". The amendments in this update require public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items in the notes to the financial statements. Public business entities are required to apply the guidance prospectively or retrospectively. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of ASU 2024-03 will have on the Company's consolidated financial statements. 10 Table of Contents In December 2023, the FASB issued ASU 2023-09 , " Income Taxes (Topic 740): Improvements to Income Tax Disclosures" . This ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. The new standard is effective for fiscal years beginning after December 15, 2024, with retrospective application permitted. The Company is currently evaluating this guidance to determine the impact on its disclosures; however, adoption will impact only the notes to our consolidated financial statements. NOTE 2. REVENUE RECOGNITION In the following table, revenue from contracts with customers, net of all intercompany sales, is disaggregated by market type and by reportable segment: Second Quarter Ended June 29, 2025 ($ in thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 331,269 $ 148,006 $ 479,275 Marine 144,407 12,085 156,492 Powersports 91,719 4,659 96,378 Manufactured Housing 81,537 100,910 182,447 Industrial 122,739 10,223 132,962 Total $ 771,671 $ 275,883 $ 1,047,554 Second Quarter Ended June 30, 2024 ($ in thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 309,339 $ 140,396 $ 449,735 Marine 145,374 12,304 157,678 Powersports 100,349 3,501 103,850 Manufactured Housing 77,473 97,139 174,612 Industrial 121,177 9,572 130,749 Total $ 753,712 $ 262,912 $ 1,016,624 Six Months Ended June 29, 2025 ($ in thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 677,242 $ 280,925 $ 958,167 Marine 283,773 21,766 305,539 Powersports 168,953 8,365 177,318 Manufactured Housing 157,864 197,809 355,673 Industrial 234,601 19,676 254,277 Total $ 1,522,433 $ 528,541 $ 2,050,974 11 Table of Contents Six Months Ended June 30, 2024 ($ in thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 601,150 $ 269,574 $ 870,724 Marine 291,419 21,574 312,993 Powersports 180,308 6,212 186,520 Manufactured Housing 146,898 183,838 330,736 Industrial 231,480 17,663 249,143 Total $ 1,451,255 $ 498,861 $ 1,950,116 Contract Liabilities Contract liabilities, representing upfront payments from customers received prior to satisfying performance obligations, were immaterial as of the beginning and end of all periods presented and changes in contract liabilities were immaterial during all periods presented. NOTE 3. INVENTORY Inventories consisted of the following: ($ in thousands) June 29, 2025 December 31, 2024 Raw materials $ 306,433 $ 292,730 Work in process 18,542 18,157 Finished goods 105,856 103,318 Less: reserve for inventory excess and obsolescence ( 19,080 ) ( 16,456 ) Total manufactured goods, net 411,751 397,749 Materials purchased for resale (distribution products) 152,799 161,492 Less: reserve for inventory excess and obsolescence ( 9,919 ) ( 7,624 ) Total materials purchased for resale (distribution products), net 142,880 153,868 Total inventories $ 554,631 $ 551,617 NOTE 4. GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill for the six months ended June 29, 2025 by segment are as follows: ($ in thousands) Manufacturing Distribution Total Balance at December 31, 2024 $ 680,246 $ 116,990 $ 797,236 Acquisitions 4,027 — 4,027 Adjustments to preliminary purchase price allocations 110 412 522 Balance at June 29, 2025 $ 684,383 $ 117,402 $ 801,785 12 Table of Contents Intangible assets, net consisted of the following as of June 29, 2025 and December 31, 2024: ($ in thousands) June 29, 2025 December 31, 2024 Customer relationships $ 934,715 $ 924,720 Non-compete agreements 26,176 25,776 Patents 90,904 89,641 Trademarks 226,427 225,527 Intangible assets, gross 1,278,222 1,265,664 Less: accumulated amortization Customer relationships ( 463,526 ) ( 419,358 ) Non-compete agreements ( 21,184 ) ( 20,065 ) Patents ( 27,203 ) ( 23,352 ) Intangible assets, net $ 766,309 $ 802,889 Changes in the carrying value of intangible assets for the six months ended June 29, 2025 by segment are as follows: ($ in thousands) Manufacturing Distribution Total Balance at December 31, 2024 $ 671,131 $ 131,758 $ 802,889 Additions 10,963 — 10,963 Amortization ( 41,552 ) ( 7,586 ) ( 49,138 ) Adjustments to preliminary purchase price allocations 357 1,238 1,595 Balance at June 29, 2025 $ 640,899 $ 125,410 $ 766,309 NOTE 5. ACQUISITIONS General Business combinations generally take place to strengthen Patrick's positions in existing markets and increase its market share and product offerings, expand into additional markets, and gain key technologies. Acquisitions are accounted for under the acquisition method of accounting. For each acquisition, the excess of the purchase consideration over the fair value of the net assets acquired is recorded as goodwill, which generally represents the combined value of the Company’s existing purchasing, manufacturing, sales, and systems resources with the organizational talent and expertise of the acquired companies’ respective management teams to maximize efficiencies, market share growth and net income. The Company completed two acquisitions in the first six months of 2025 (the "2025 Acquisitions"). Acquisition-related costs associated with the 2025 Acquisitions were immaterial . For the second quarter and six months ended June 29, 2025, net sales included in the Company's condensed consolidated statements of income related to the 2025 Acquisitions were $ 8.9 million and $ 13.2 million, respectively, and operating losses were $ 0.3 million and $ 0.4 million, respectively. Assets acquired and liabilities assumed in the acquisitions were recorded on the Company's condensed consolidated balance sheet at their estimated fair values as of the respective dates of acquisition. For each acquisition, the Company completes its allocation of the purchase price to the fair value of acquired assets and liabilities within a one year measurement period. The Company completed two acquisitions in the second quarter of 2024 and six acquisitions in the first six months of 2024. Acquisition-related costs associated with the acquisitions completed in the first six months of 2024 were approximately $ 5.0 million. For the second quarter and six months ended June 30, 2024, net sales included in the Company's condensed consolidated statements of income related to the acquisitions completed in the first six months of 2024 were $ 79.6 million and $ 137.7 million, respectively, and operating income was $ 15.7 million and $ 26.6 million, respectively. 13 Table of Contents In connection with certain acquisitions, the Company is required to pay additional cash consideration if certain financial results of the acquired businesses are achieved. The Company records a liability for the estimated fair value of the contingent consideration related to each of these acquisitions as part of the initial purchase price based on the present value of the expected future cash flows and the probability of future payments at the date of acquisition. Changes in the contingent consideration liability for the second quarter and six months ended June 29, 2025 and June 30, 2024 are as follows: Second Quarter Ended Six Months Ended ($ in thousands) June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Fair value at beginning of period $ 3,792 $ 4,630 $ 3,608 $ 8,510 Additions — 130 1,800 130 Fair value adjustments — ( 1,900 ) ( 1,600 ) ( 1,900 ) Settlements ( 16 ) ( 1,060 ) ( 32 ) ( 4,940 ) Fair value at end of period $ 3,776 $ 1,800 $ 3,776 $ 1,800 The following table shows the balance sheet location of the fair value of contingent consideration and the maximum amount of contingent consideration payments the Company may be subject to: ($ in thousands) June 29, 2025 December 31, 2024 Accrued liabilities $ 1,565 $ 1,665 Other long-term liabilities 2,211 1,943 Total fair value of contingent consideration $ 3,776 $ 3,608 Maximum amount of contingent consideration $ 6,876 $ 8,618 2025 Acquisitions The Company completed two acquisitions in the first six months ended June 29, 2025. Total cash consideration for the 2025 Acquisitions was approximately $ 43.8 million, plus contingent consideration over a less than one-year period based on future performance in connection with one acquisition. As the Company finalizes the fair value of the acquired assets and assumed liabilities, additional purchase price adjustments may be recorded during the measurement period. 2024 Acquisitions The Company completed seven acquisitions in the year ended December 31, 2024, including the following previously announced acquisitions (collectively, the “2024 Acquisitions”): Company Segment Description Sportech, LLC ("Sportech") Manufacturing Leading designer and manufacturer of high-value, complex component solutions sold to powersports original equipment manufacturers ("OEMs"), adjacent market OEMs and the aftermarket, including integrated door systems, roofs, canopies, bumpers, windshields, fender flares and cowls, based in Elk River, Minnesota, acquired in January 2024. ICON Direct LLC, doing business as RecPro ("RecPro") Distribution Leading e-commerce business and aftermarket platform specializing in creating and marketing component products, systems, and solutions for the RV and marine end markets, based in Bristol, Indiana, acquired in September 2024. 14 Table of Contents Inclusive of five acquisitions not discussed above, total cash consideration for the 2024 Acquisitions was approximately $ 416.1 million, plus contingent consideration over a three-year period based on future performance in connection with certain acquisitions. Purchase price allocations and all valuation activities in connection with the 2024 Acquisitions have been finalized for six of the 2024 Acquisitions. Changes to preliminary purchase accounting estimates recorded in the six months ended June 29, 2025 related to the 2024 Acquisitions were immaterial. The following table summarizes the fair values of the assets acquired and the liabilities assumed as of the date of each of the 2025 Acquisitions and 2024 Acquisitions: 2025 Acquisitions 2024 Acquisitions ($ in thousands) Total Sportech All Others Total Consideration: Cash, net of cash acquired $ 43,847 $ 319,073 $ 96,998 $ 416,071 Contingent consideration (1) 1,800 — 2,030 2,030 Total consideration $ 45,647 $ 319,073 $ 99,028 $ 418,101 Assets Acquired: Trade receivables $ 3,049 $ 21,587 $ 2,256 $ 23,843 Inventories 7,669 20,611 19,010 39,621 Prepaid expenses & other 346 1,719 4,138 5,857 Property, plant & equipment 28,032 18,766 7,021 25,787 Operating lease right-of-use assets — 15,096 1,284 16,380 Identifiable intangible assets: Customer relationships 8,400 152,000 17,560 169,560 Non-compete agreements 400 2,000 2,375 4,375 Patents and developed technology 1,200 17,500 600 18,100 Trademarks 900 20,500 8,000 28,500 Liabilities Assumed: Current portion of operating lease obligations — ( 1,437 ) ( 585 ) ( 2,022 ) Accounts payable & accrued liabilities ( 8,376 ) ( 32,398 ) ( 4,313 ) ( 36,711 ) Operating lease obligations — ( 13,658 ) ( 699 ) ( 14,357 ) Deferred tax liabilities — ( 21,288 ) — ( 21,288 ) Total fair value of net assets acquired 41,620 200,998 56,647 257,645 Goodwill (2) 4,027 118,075 42,381 160,456 Total purchase price allocation $ 45,647 $ 319,073 $ 99,028 $ 418,101 (1) These amounts reflect the acquisition date fair value of contingent consideration based on expected future results relating to certain acquisitions. (2) Goodwill is tax-deductible for the 2025 Acquisitions and 2024 Acquisitions, except for Sportech which is only partially tax-deductible. We estimate the value of acquired property, plant, and equipment using a combination of the income, cost, and market approaches, such as estimates of future income growth, capitalization rates, discount rates, and capital expenditure needs of the acquired businesses. We estimate the value of customer relationships using the multi-period excess earnings method, which is a variation of the income approach, calculating the present value of incremental after-tax cash flows attributable to the asset. Non-compete agreements are valued using a discounted cash flow approach, which is a variation of the income approach, with and without the individual counterparties to the non-compete agreements. Trademarks and patents are valued using the relief-from-royalty method, which applies an estimated royalty rate to forecasted future cash flows, discounted to present value. 15 Table of Contents The estimated useful life for customer relationships is 10 years. The average estimated useful life for non-compete agreements is 5 years. The estimated useful life for patents is 13 years, individually ranging from 10 to 18 years. Trademarks have an indefinite useful life. Pro Forma Information (Unaudited) The following pro forma information for the second quarter and six months ended June 29, 2025 and June 30, 2024 assumes the 2025 Acquisitions and 2024 Acquisitions occurred as of the beginning of the year immediately preceding each such acquisition. The pro forma information contains the actual operating results of the 2025 Acquisitions and 2024 Acquisitions combined with the results prior to their respective acquisition dates, adjusted to reflect the pro forma impact of the acquisitions occurring as of the beginning of the year immediately preceding each such acquisition. The pro forma information includes financing and interest expense charges based on incremental borrowings incurred in connection with each transaction. In addition, the pro forma information includes incremental amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of zero and $ 0.1 million for the second quarter and six months ended June 29, 2025, respectively, and $ 0.6 million and $ 2.3 million for the second quarter and six months ended June 30, 2024, respectively. Second Quarter Ended Six Months Ended ($ in thousands, except per share data) June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Revenue $ 1,047,554 $ 1,047,272 $ 2,057,427 $ 2,035,596 Net income $ 32,436 $ 48,556 $ 70,169 $ 84,098 Basic earnings per common share $ 1.00 $ 1.49 $ 2.15 $ 2.59 Diluted earnings per common share $ 0.96 $ 1.46 $ 2.06 $ 2.53 The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisitions been consummated as of the periods indicated above. NOTE 6. STOCK-BASED COMPENSATION The Company recorded stock-based compensation expense, net of forfeitures, of approximately $ 6.1 million and $ 11.3 million in the second quarter and six months ended June 29, 2025, respectively, and $ 4.2 million and $ 9.7 million in the second quarter and six months ended June 30, 2024, respectively. The Board approved various share grants under the Company’s 2009 Omnibus Incentive Plan in the six months ended June 29, 2025 totaling 242,035 shares in the aggregate at an average fair value of $ 94.97 per share at grant date for a total fair value at grant date of $ 23.0 million. Stock Appreciation Rights ("SARs"): On February 25, 2025, the Board approved the grant of 329,850 SARs divided into four tranches at exercise prices of $ 92.72 , $ 110.76 , $ 132.31 and $ 158.05 per share. The SARs vest pro-ratably over four years from the grant date and have nine-year contractual terms. The SARs are to be settled in shares of common stock or, at the sole discretion of the Board, in cash. As of June 29, 2025, the total remaining cost to be expensed over the four-year vesting period will be $ 5.7 million which will be expensed ratably over the four-year vesting period. 16 Table of Contents Stock Options: On February 25, 2025, the Board approved the grant of 329,850 stock options at an exercise price per share of $ 92.72 . The stock options vest pro-rata over four years from the grant date and have nine-year contractual terms. As of June 29, 2025, the total remaining cost will be $ 8.1 million which will be expensed ratably over the four-year vesting period. The Company estimates the fair value of the stock options and SARs awards as of the grant date by applying the Black-Scholes option-pricing model. The following are the assumptions that were used in calculating the fair value of stock options and SARs granted during the first quarter of 2025: Expected term 9 years Expected volatility 24 % Risk-free interest rate 4.25 % Dividend yield 1.77 % NOTE 7. EARNINGS PER COMMON SHARE Earnings per common share calculated for the second quarter and first six months of 2025 and 2024 is as follows: ($ and shares in thousands, except per share data) Second Quarter Ended Six Months Ended June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Numerator: Earnings for basic earnings per common share calculation $ 32,436 $ 47,884 $ 70,674 $ 82,977 Denominator: (1) Weighted average common shares outstanding - basic 32,520 32,586 32,595 32,533 Weighted average impact of potentially dilutive convertible notes 903 391 984 349 Weighted average impact of potentially dilutive warrants 199 — 295 — Weighted average impact of potentially dilutive securities 201 277 242 305 Weighted average common shares outstanding - diluted 33,823 33,254 34,116 33,187 Earnings per common share: (1) Basic earnings per common share $ 1.00 $ 1.47 $ 2.17 $ 2.55 Diluted earnings per common share $ 0.96 $ 1.44 $ 2.07 $ 2.50 (1) The prior year periods reflect the impact of the three-for-two stock split paid in December 2024. See Note 1 "Basis of Presentation and Significant Accounting Policies" for further details. An immaterial amount of securities were not included in the computation of diluted earnings per common share as they are considered anti-dilutive for the periods presented. 17 Table of Contents NOTE 8. DEBT A summary of total debt outstanding at June 29, 2025 and December 31, 2024 is as follows: ($ in thousands) June 29, 2025 December 31, 2024 Long-term debt: Term loan due 2029 $ 121,875 $ 123,438 Revolver due 2029 55,000 100,000 1.75 % convertible notes due 2028 258,725 258,750 4.75 % senior notes due 2029 350,000 350,000 6.375 % senior notes due 2032 500,000 500,000 Total debt 1,285,600 1,332,188 Less: convertible notes deferred financing costs, net ( 3,422 ) ( 3,915 ) Less: term loan deferred financing costs, net ( 486 ) ( 543 ) Less: senior notes deferred financing costs, net ( 9,144 ) ( 9,796 ) Less: current maturities of long-term debt ( 6,250 ) ( 6,250 ) Total long-term debt, less current maturities, net $ 1,266,298 $ 1,311,684 As of June 29, 2025, the Company maintained a senior secured credit facility comprised of a $ 875 million revolving credit facility (the "Revolver due 2029") and a $ 125 million term loan (the "Term Loan due 2029") and together with the Revolver due 2029, (the "2024 Credit Facility"). The interest rate for incremental borrowings under the Revolver due 2029 as of June 29, 2025 was the Secured Overnight Financing Rate (“SOFR”) plus 1.75 % (or 6.07 %) for the SOFR-based option. The fee payable on committed but unused portions of the Revolver due 2029 was 0.225 % as of June 29, 2025. Total cash interest paid was $ 32.9 million and $ 34.6 million for the second quarter and six months ended June 29, 2025, respectively, and $ 31.6 million and $ 40.2 million for the second quarter and six months ended June 30, 2024, respectively. Conditional Conversion Feature of the 1.75 % Convertible Senior Notes due 2028 As of June 29, 2025, the conditional conversion feature of the 1.75 % Convertible Senior Notes due 2028 (the “ 1.75 % Convertible Notes”) related to the price of our common stock equaling or exceeding 130 % of the conversion price was triggered. As a result, the 1.75 % Convertible Notes are convertible, in whole or in part, at the option of the holders from July 1, 2025 to September 30, 2025. 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. 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 respective prior calendar quarter. The 1.75 % Convertible Notes converted during the period from January 1, 2025 to June 30, 2025 were immaterial. The Company has the intent and ability to utilize available borrowing capacity under the Revolver due 2029 to satisfy any cash conversion obligations that it may have, should holders choose to exercise their conversion rights during the period noted above. 18 Table of Contents NOTE 9. FAIR VALUE MEASUREMENTS The following table presents fair values of certain assets and liabilities as of June 29, 2025 and December 31, 2024: June 29, 2025 December 31, 2024 ($ in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1.75 % convertible notes due 2028 (1) $ — $ 376.5 $ — $ — $ 351.3 $ — 4.75 % senior notes due 2029 (1) $ — $ 339.3 $ — $ — $ 330.3 $ — 6.375 % senior notes due 2032 (1) $ — $ 500.4 $ — $ — $ 485.0 $ — Term loan due 2029 (1) (2) $ — $ 121.9 $ — $ — $ 123.4 $ — Revolver due 2029 (1) (2) $ — $ 55.0 $ — $ — $ 100.0 $ — Contingent consideration (3) $ — $ — $ 3.8 $ — $ — $ 3.6 (1) The amounts of these notes listed above are the fair values for disclosure purposes only, and they are recorded in the Company's condensed consolidated balance sheets as of June 29, 2025 and December 31, 2024 at carrying value. (2) The carrying amounts of our term loan and revolving credit facility approximate fair value as of June 29, 2025 and December 31, 2024 based upon their terms and conditions in comparison to the terms and conditions of debt instruments with similar terms and conditions available at those dates. (3) The estimated fair value of the Company's contingent consideration is discussed further in Note 5 "Acquisitions". NOTE 10. INCOME TAXES The effective tax rate in the second quarter of 2025 and 2024 was 25.3 % and 25.6 %, respectively, and the effective tax rate for the comparable six month periods was 21.4 % and 19.9 %, respectively. The first six months of 2025 and 2024 tax rates include the impact of the recognition of excess tax benefits on share-based compensation that was recorded as a reduction to income tax expense in the amount of $ 3.0 million and $ 5.6 million, respectively. Cash paid for income taxes, net of refunds, was $ 14.9 million and $ 22.3 million in the second quarter and first six months of 2025, respectively, and $ 19.1 million and $ 19.2 million in the second quarter and first six months of 2024, respectively. On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was signed into law. The OBBBA makes permanent many of the expired and expiring tax provisions originally enacted in the Tax Cuts and Jobs Act of 2017, including the immediate expensing of domestic research and development expenditures, more favorable business interest deductibility and 100 percent first-year bonus depreciation on qualifying property with effective dates in 2025. The Company is currently evaluating the impact of these provisions. However, since the OBBBA was enacted after the end of the second quarter of 2025, any resulting impacts will be reflected in subsequent reporting periods and are not expected to be material. NOTE 11. SEGMENT INFORMATION The Company has two reportable segments, Manufacturing and Distribution, which are defined based on the way in which internally reported information is regularly reviewed and evaluated by the Company’s chief operating decision maker (the "CODM"), who is our Chairman and Chief Executive Officer, to allocate resources, evaluate financial results and make decisions. The Company does not measure profitability at the end market (RV, marine, powersports, MH and industrial) level. Manufacturing – This segment includes the following products: laminated products that are utilized to produce furniture, shelving, walls, countertops and cabinet products; cabinet doors; fiberglass bath fixtures and tile systems; hardwood furniture; vinyl printing; RV and marine furniture; audio systems and accessories, including amplifiers, tower speakers, soundbars, and subwoofers; decorative vinyl and paper laminated panels; solid surface, granite, and quartz countertop fabrication; RV painting; fabricated aluminum products; fiberglass and plastic components; fiberglass bath fixtures and tile systems; softwoods lumber; custom cabinetry; polymer-based and other flooring; electrical systems components including instrument and dash panels; wrapped vinyl, paper and hardwood profile mouldings; interior passage doors; air handling products; slide-out trim and fascia; thermoformed shower surrounds; specialty bath and 19 Table of Contents closet building products; fiberglass and plastic helm systems and components products; treated, untreated and laminated plywood; wiring and wire harnesses; adhesives and sealants; boat towers, tops, trailers and frames; marine hardware and accessories; protective covers for boats, RVs, aircraft, and military and industrial equipment; aluminum and plastic fuel tanks; CNC molds and composite parts; roofs/canopies; wiper systems; integrated door systems; windshield systems; slotwall panels and components; fender flares and rear panels; and other products. Distribution – The Company distributes pre-finished wall and ceiling panels; drywall and drywall finishing products; electronics and audio systems components; appliances; marine accessories and components; wiring, electrical and plumbing products; fiber reinforced polyester products; cement siding; raw and processed lumber; interior passage doors; roofing products; laminate and ceramic flooring; tile; shower doors; furniture; fireplaces and surrounds; interior and exterior lighting products; RV awnings, windows, fiberglass siding and roofing; marine windshields; and other miscellaneous products in addition to providing transportation and logistics services. The CODM evaluates the performance of the Company's segments and allocates resources to them based on a variety of indicators including but not limited to net sales, gross profit and operating income. On at least a quarterly basis, the CODM considers actual to budget variances as well as actual to prior year actual performance for both profit measures when making decisions about the allocation of operating and capital resources to each segment. The CODM also uses segment gross profit and segment operating income to assess the performance of each segment by comparing the results of each segment with one another. The accounting policies of the segments are the same as those described in Note 1 "Basis of Presentation and Significant Accounting Policies" included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 20, 2025. Segment net sales data includes inter-segment sales. The Company accounts for inter-segment sales similar to third party transactions, which reflect current market prices. Certain income from purchase incentive agreements is not allocated to the segments and instead recorded at the corporate level. Assets are identified to the segments except for cash, prepaid expenses, land and buildings, and certain deferred assets, which are identified with corporate. Corporate charges rent to the segments for use of the land and buildings based upon estimated market rates. The following tables summarize key financial information by segment: Second Quarter Ended June 29, 2025 ($ in thousands) Manufacturing Distribution Total Total net sales $ 776,520 $ 277,488 $ 1,054,008 Cost of goods sold 597,232 205,314 802,546 Gross profit $ 179,288 $ 72,174 $ 251,462 Operating expenses 76,165 39,756 115,921 Operating income $ 103,123 $ 32,418 $ 135,541 Reconciliation of reportable segment operating income to consolidated income before income tax: Selling, general and administrative 24,305 Amortization of intangible assets 24,515 Interest expense, net 18,869 Elimination of inter-segment profits ( 1 ) Other expense 24,420 Consolidated income before income taxes $ 43,433 Capital expenditures $ 12,256 $ 8 $ 12,264 Depreciation and amortization $ 36,413 $ 4,559 $ 40,972 20 Table of Contents Second Quarter Ended June 30, 2024 ($ in thousands) Manufacturing Distribution Total Total net sales $ 774,231 $ 265,237 $ 1,039,468 Cost of goods sold 595,487 207,105 802,592 Gross Profit $ 178,744 $ 58,132 $ 236,876 Operating expenses 69,992 27,974 97,966 Operating income $ 108,752 $ 30,158 $ 138,910 Reconciliation of reportable segment operating income to consolidated income before income tax: Selling, general and administrative 24,654 Amortization of intangible assets 24,254 Interest expense, net 20,343 Elimination of inter-segment profits 5,313 Consolidated income before income taxes $ 64,346 Capital expenditures $ 7,784 $ 2,146 $ 9,930 Depreciation and amortization $ 35,673 $ 4,067 $ 39,740 Six Months Ended June 29, 2025 ($ in thousands) Manufacturing Distribution Total Total net sales $ 1,531,007 $ 531,574 $ 2,062,581 Cost of goods sold 1,182,328 397,699 1,580,027 Gross profit $ 348,679 $ 133,875 $ 482,554 Operating expenses 147,435 76,457 223,892 Operating income $ 201,244 $ 57,418 $ 258,662 Reconciliation of reportable segment operating income to consolidated income before income tax: Selling, general and administrative 55,884 Amortization of intangible assets 48,976 Interest expense, net 37,981 Elimination of inter-segment profits 1,511 Other expense 24,420 Consolidated income before income taxes $ 89,890 Capital expenditures $ 29,821 $ 554 $ 30,375 Depreciation and amortization $ 72,916 $ 9,131 $ 82,047 21 Table of Contents Six Months Ended June 30, 2024 ($ in thousands) Manufacturing Distribution Total Total net sales $ 1,488,741 $ 503,739 $ 1,992,480 Cost of goods sold 1,153,823 395,550 1,549,373 Gross profit $ 334,918 $ 108,189 $ 443,107 Operating expenses 138,716 54,311 193,027 Operating income $ 196,202 $ 53,878 $ 250,080 Reconciliation of reportable segment operating income to consolidated income before income tax: Selling, general and administrative 52,577 Amortization of intangible assets 47,088 Interest expense, net 40,433 Elimination of inter-segment profits 6,384 Consolidated income before income taxes $ 103,598 Capital expenditures $ 18,280 $ 5,730 $ 24,010 Depreciation and amortization $ 71,090 $ 7,388 $ 78,478 A reconciliation of certain line items pertaining to the total reportable segments to the condensed consolidated financial statements in the second quarter and first six months ended June 29, 2025 and June 30, 2024, and as of June 29, 2025 and December 31, 2024 is as follows: Second Quarter Ended Six Months Ended ($ in thousands) June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Net sales: Total sales for reportable segments $ 1,054,008 $ 1,039,468 $ 2,062,581 $ 1,992,480 Elimination of inter-segment sales (1) ( 6,454 ) ( 22,844 ) ( 11,607 ) ( 42,364 ) Consolidated net sales $ 1,047,554 $ 1,016,624 $ 2,050,974 $ 1,950,116 Depreciation and amortization: Depreciation and amortization for reportable segments $ 40,972 $ 39,740 $ 82,047 $ 78,478 Corporate depreciation and amortization 1,637 1,741 3,208 3,338 Consolidated depreciation and amortization $ 42,609 $ 41,481 $ 85,255 $ 81,816 Capital expenditures: Capital expenditures for reportable segments $ 12,264 $ 9,930 $ 30,375 $ 24,010 Corporate capital expenditures 6,011 6,986 8,071 8,401 Consolidated capital expenditures $ 18,275 $ 16,916 $ 38,446 $ 32,411 (1) Eliminations for the second quarter and six months ended June 29, 2025 include only the elimination of inter-segment transactions. 22 Table of Contents As of ($ in thousands) June 29, 2025 December 31, 2024 Total assets: Manufacturing segment assets $ 2,478,132 $ 2,402,533 Distribution segment assets 523,835 524,827 Corporate assets unallocated to segments 55,271 60,033 Cash and cash equivalents 21,974 33,561 Consolidated total assets $ 3,079,212 $ 3,020,954 The Company's revenue from external customers and long-lived assets are substantially all attributed to the U.S. NOTE 12. STOCK REPURCHASE PROGRAMS In November 2024, the Board authorized an increase in the amount of the Company's common stock that may be acquired over the next 24 months under the current stock repurchase program to $ 200 million, including the $ 72.9 million remaining under the previous authorization. As of June 29, 2025, Patrick had approximately $ 168.0 million remaining in the amount of the Company's common stock that may be acquired under the current stock repurchase program. Under the stock repurchase plan, the Company made repurchases of common stock as follows for the respective periods: Second Quarter Ended Six Months Ended ($ in millions, except average price data) June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Shares repurchased 277,849 — 377,612 — Average price $ 84.43 $ — $ 84.66 $ — Aggregate cost $ 23.5 $ — $ 32.0 $ — NOTE 13. COMMITMENTS AND CONTINGENCIES The Company is subject to proceedings, lawsuits, audits, and other claims arising in the normal course of business. All such matters are subject to uncertainties and outcomes that are not predictable with assurance. Accruals for these items, when applicable, have been provided to the extent that losses are deemed probable and are reasonably estimable. These accruals are adjusted from time to time as developments warrant. Although the ultimate outcome of these matters cannot be ascertained, on the basis of present information, amounts already provided, availability of insurance coverage and legal advice received, it is the opinion of management that the ultimate resolution of these proceedings, lawsuits, and other claims will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. In the Company's Form 10-K for the year ended December 31, 2024, the Company described the current status of litigation concerning the Lusher Site Remediation Group. In early July 2023, the Court granted the Company’s Rule 54(b) Motion for Final Judgment on previously dismissed claims and granted the Company’s Motion to Dismiss the plaintiff’s remaining claims against the defendants, without prejudice (the Company’s Motion to Dismiss having been joined by the remaining defendants in the litigation.) The only remaining issue pending in the litigation for the Court’s determination is the plaintiff’s motion to bar contribution claims. The Company has also been named as a potentially responsible party for the related Lusher Street Groundwater Contamination Superfund Site (the "Superfund Site") by the U.S. Environmental Protection Agency (the "EPA"). There has been no change in the status of the proceedings as described in the 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025. The Company does not currently believe that the litigation or the Superfund Site matter are likely to have a material adverse impact on its financial condition, results of operations, or cash flows. However, any litigation is inherently uncertain, the EPA has yet to select a final remedy for the Superfund Site, and any judgment or injunctive relief entered against us or any adverse settlement could materially and adversely impact our business, results of operations, financial condition, and prospects. 23 Table of Contents NOTE 14. SUBSEQUENT EVENTS On July 11, 2025, the Company agreed to settle a pending lawsuit that existed as of June 29, 2025. The lawsuit involved claims of wrongful death arising out of a motor vehicle accident which resulted in two fatalities. The settlement is conditioned upon, among other matters, the parties’ finalization and execution of a confidential settlement agreement, to be court-approved in part, and payment by the Company of $ 24.4 million during the third quarter of 2025. In accordance with ASC 855, Subsequent Events, this amount reflects the Company’s probable obligation, as a result, for the second quarter and the first six months ended June 29, 2025, $ 24.4 million has been recognized within "Other expenses" in the Company’s condensed consolidated financial statements of income.