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Item 1. Financial Statements

2025-11-06 compared with 2025-08-07 · 122 added, 112 removed, 576 unchanged (29% of the section changed)

2 unchanged sentences

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

Third Quarter Ended Nine Months Ended

($ and shares in thousands, except per share data) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Net sales $ 975,631 $ 919,444 $ 3,026,605 $ 2,869,560

25 unchanged sentences

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

Third Quarter Ended Nine Months Ended

($ in thousands) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Net income $ 35,303 $ 40,866 $ 105,977 $ 123,843

6 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in thousands) June 29, 2025 December 31, 2024

($ in thousands) September 28, 2025 December 31, 2024

Current Assets:

24 unchanged sentences

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

Common stock, no par value per share, 60,000,000 shares authorized, 33,276,895 and 33,567,048 issued and outstanding as of September 28, 2025 and December 31, 2024, respectively

206,324 202,353

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six Months Ended

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

Nine Months Ended

($ in thousands) September 28, 2025 September 29, 2024

Cash flows from operating activities

36 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

Second Quarter Ended June 29, 2025

Third Quarter Ended September 28, 2025

($ in thousands) Common

2 unchanged sentences

Earnings Total

Balance at March 30, 2025 $ 198,408 $ ( 922 ) $ 943,782 $ 1,141,268

Balance at June 29, 2025 $ 202,765 $ ( 928 ) $ 941,272 $ 1,143,109

Net income — — 35,303 35,303

Dividends declared — — ( 13,461 ) ( 13,461 )

Other comprehensive income, net of tax — ( 6 ) — ( 6 )

Stock repurchases under buyback program ( 1,676 ) — ( 21,782 ) ( 23,458 )

Other comprehensive loss, net of tax — ( 4 ) — ( 4 )

Repurchase of shares for tax payments related to the vesting and exercising of share-based grants ( 308 ) — — ( 308 )

Stock-based compensation expense 3,867 — — 3,867

Balance at June 29, 2025 $ 202,765 $ ( 928 ) $ 941,272 $ 1,143,109

Second Quarter Ended June 30, 2024

Balance at September 28, 2025 $ 206,324 $ ( 932 ) $ 963,114 $ 1,168,506

Third Quarter Ended September 29, 2024

($ in thousands) Common

2 unchanged sentences

Earnings Total

Balance at March 31, 2024 $ 193,930 $ ( 1,031 ) $ 865,637 $ 1,058,536

Balance at June 30, 2024 $ 198,138 $ ( 1,028 ) $ 901,394 $ 1,098,504

Net income — — 40,866 40,866

2 unchanged sentences

Repurchase of shares for tax payments related to the vesting and exercising of share-based grants ( 2,233 ) — — ( 2,233 )

Issuance of shares upon exercise of common stock options 21 — — 21

Stock-based compensation expense 4,625 — — 4,625

Balance at June 30, 2024 $ 198,138 $ ( 1,028 ) $ 901,394 $ 1,098,504

Balance at September 29, 2024 $ 200,530 $ ( 985 ) $ 929,936 $ 1,129,481

See accompanying Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Continued)

Six Months Ended June 29, 2025

Nine Months Ended September 28, 2025

($ in thousands) Common

7 unchanged sentences

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 )

Repurchase of shares for tax payments related to the vesting and exercising of share-based grants ( 8,919 ) — — ( 8,919 )

Stock-based compensation expense 15,167 — — 15,167

Balance at June 29, 2025 $ 202,765 $ ( 928 ) $ 941,272 $ 1,143,109

Six Months Ended June 30, 2024

Balance at September 28, 2025 $ 206,324 $ ( 932 ) $ 963,114 $ 1,168,506

Nine Months Ended September 29, 2024

($ in thousands) Common

5 unchanged sentences

Dividends declared — — ( 36,985 ) ( 36,985 )

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 )

Other comprehensive income, net of tax — 14 — 14

Repurchase of shares for tax payments related to the vesting and exercising of share-based grants ( 17,116 ) — — ( 17,116 )

Issuance of shares upon exercise of common stock options 21 — — 21

Stock-based compensation expense 14,367 — — 14,367

Balance at June 30, 2024 $ 198,138 $ ( 1,028 ) $ 901,394 $ 1,098,504

Balance at September 29, 2024 $ 200,530 $ ( 985 ) $ 929,936 $ 1,129,481

See accompanying Notes to Condensed Consolidated Financial Statements.

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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”, 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 September 28, 2025 and December 31, 2024, its results of operations for the third quarter and nine months ended September 28, 2025 and September 29, 2024, and its cash flows for the nine months ended September 28, 2025 and September 29, 2024.

Patrick's unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S.

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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.

The third quarter of fiscal year 2025 ended on September 28, 2025, and the third quarter of fiscal year 2024 ended on September 29, 2024.

Earnings Per Common Share

12 unchanged sentences

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

The Company had two major customers that accounted for the following consolidated net sales for the third quarter and nine months ended September 28, 2025 and September 29, 2024:

Third Quarter Ended Nine Months Ended

September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Percentage of total net sales:

1 unchanged sentence

13 % 14 % 15 % 15 %

The Company had one major customers that accounted for the following trade receivables as of June 29, 2025 and December 31, 2024:

June 29, 2025 December 31, 2024

The Company had two major customers that accounted for the following trade receivables as of September 28, 2025 and December 31, 2024:

September 28, 2025 December 31, 2024

Percentage of trade receivables, net:

Customer 1 10 % 8 %

Other expenses

During the nine months ended September 28, 2025, the Company recognized a legal settlement expense of $ 24.4 million, related to a motor vehicle accident that resulted in two fatalities, within "Other expenses" in the Company's condensed consolidated statements of income.

New Accounting Standards

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Accounting Standards Not Yet Adopted

In September 2025, the FASB issued ASU 2025-06 , "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software" .

This update eliminates the previous stage-based capitalization model for internal-use software projects and instead requires capitalization once management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended.

The update permits an entity to apply the new guidance using a prospective transition approach, modified transition approach or a retrospective transition approach.

This ASU is effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years.

Early adoption is permitted.

The Company is currently evaluating the effects that the adoption of ASU 2025-06 will have on the Company's consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, "Financial Instruments—Credit Losses (Topic 326):

Practical Expedient for Measuring Credit Losses on Current Accounts Receivable and Contract Assets" .

This update provides a practical expedient that allows entities to measure expected credit losses on current trade receivables and current contract assets by assuming that the current conditions as of the balance sheet date will persist for the life of those assets.

An entity that elects the practical expedient should apply the amendments prospectively.

This ASU is effective for fiscal years

beginning after December 15, 2025 and interim periods within those fiscal years.

Early adoption is permitted.

The Company is currently evaluating the effects that the adoption of ASU 2025-05 will have on the Company's consolidated financial statements.

In January 2025, the FASB issued ASU 2025-01 , "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

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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

Third Quarter Ended September 28, 2025

($ in thousands) Manufacturing Distribution Total

5 unchanged sentences

Total $ 718,601 $ 257,030 $ 975,631

Second Quarter Ended June 30, 2024

Third Quarter Ended September 29, 2024

($ in thousands) Manufacturing Distribution Total

5 unchanged sentences

Total $ 675,526 $ 243,918 $ 919,444

Six Months Ended June 29, 2025

Nine Months Ended September 28, 2025

($ in thousands) Manufacturing Distribution Total

5 unchanged sentences

Total $ 2,241,034 $ 785,571 $ 3,026,605

Six Months Ended June 30, 2024

Nine Months Ended September 29, 2024

($ in thousands) Manufacturing Distribution Total

8 unchanged sentences

Inventories consisted of the following:

($ in thousands) June 29, 2025 December 31, 2024

($ in thousands) September 28, 2025 December 31, 2024

Raw materials $ 333,684 $ 292,730

8 unchanged sentences

GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the six months ended June 29, 2025 by segment are as follows:

Changes in the carrying amount of goodwill for the nine months ended September 28, 2025 by segment are as follows:

($ in thousands) Manufacturing Distribution Total

2 unchanged sentences

Adjustments to preliminary purchase price allocations 109 1,080 1,189

Balance at June 29, 2025

Balance at September 28, 2025

$ 697,051 $ 118,070 $ 815,121

Intangible assets, net consisted of the following as of June 29, 2025 and December 31, 2024:

($ in thousands) June 29, 2025 December 31, 2024

Intangible assets, net consisted of the following as of September 28, 2025 and December 31, 2024:

($ in thousands) September 28, 2025 December 31, 2024

Customer relationships $ 940,905 $ 924,720

8 unchanged sentences

Intangible assets, net $ 753,484 $ 802,889

Changes in the carrying value of intangible assets for the six months ended June 29, 2025 by segment are as follows:

Changes in the carrying value of intangible assets for the nine months ended September 28, 2025 by segment are as follows:

($ in thousands) Manufacturing Distribution Total

3 unchanged sentences

Adjustments to preliminary purchase price allocations 357 1,238 1,595

Balance at June 29, 2025

Balance at September 28, 2025

$ 631,854 $ 121,630 $ 753,484

2 unchanged sentences

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").

The Company completed one acquisition in the third quarter of 2025 and three acquisitions in the first nine 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.

For the third quarter and nine months ended September 28, 2025, net sales included in the Company's condensed consolidated statements of income related to the 2025 Acquisitions were $ 11.0 million and $ 24.2 million, respectively, and operating income was $ 0.1 million and operating losses were $ 0.3 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.

The Company completed one acquisition in the third quarter of 2024 and seven acquisitions in the first nine months of 2024.

Acquisition-related costs associated with the acquisitions completed in the first nine months of 2024 were approximately $ 5.0 million.

For the third quarter and nine months ended September 29, 2024, net sales included in the Company's condensed consolidated statements of income related to the acquisitions completed in the first nine months of 2024 were $ 78.6 million and $ 216.4 million, respectively, and operating income was $ 12.3 million and $ 38.9 million, respectively.

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

Changes in the contingent consideration liability for the third quarter and nine months ended September 28, 2025 and September 29, 2024 are as follows:

Third Quarter Ended

Nine Months Ended

($ in thousands) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Fair value at beginning of period $ 3,776 $ 1,800 $ 3,608 $ 8,510

4 unchanged sentences

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

($ in thousands) September 28, 2025 December 31, 2024

Accrued liabilities $ 800 $ 1,665

3 unchanged sentences

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.

The Company completed three acquisitions in the first nine months ended September 28, 2025.

Total cash consideration for the 2025 Acquisitions was approximately $ 66.0 million, plus a working capital holdback and contingent consideration over a two-year period based on future performance in connection with two acquisitions.

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.

Changes to preliminary purchase accounting estimates recorded in the third quarter and nine months ended September 28, 2025 related to the 2025 Acquisitions were immaterial.

2024 Acquisitions

4 unchanged sentences

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.

Purchase price allocations and all valuation activities in connection with the 2024 Acquisitions have been finalized.

Changes to preliminary purchase accounting estimates recorded in the third quarter and nine months ended September 28, 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:

3 unchanged sentences

Cash, net of cash acquired $ 66,012 $ 319,073 $ 96,998 $ 416,071

Working capital holdback and other, net 481 — — —

Contingent consideration (1)

31 unchanged sentences

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 following pro forma information for the third quarter and nine months ended September 28, 2025 and September 29, 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

In addition, the pro forma information includes incremental amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of $ 0.1 million and $ 0.6 million for the third quarter and nine months ended September 28, 2025, respectively, and $ 0.6 million and $ 3.2 million for the third quarter and nine months ended September 29, 2024, respectively.

Third Quarter Ended

Nine Months Ended

($ in thousands, except per share data) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Revenue $ 978,191 $ 944,823 $ 3,041,645 $ 2,984,213

4 unchanged sentences

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.

The Company recorded stock-based compensation expense, net of forfeitures, of approximately $ 3.9 million and $ 15.2 million in the third quarter and nine months ended September 28, 2025, respectively, and $ 4.7 million and $ 14.4 million in the third quarter and nine months ended September 29, 2024, respectively.

The Board approved various share grants under the Company’s 2009 Omnibus Incentive Plan in the nine months ended September 28, 2025 totaling 243,035 shares in the aggregate at an average fair value of $ 94.90 per share at grant date for a total fair value at grant date of $ 23.1 million.

Stock Appreciation Rights ("SARs"):

2 unchanged sentences

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.

As of September 28, 2025, the total remaining cost to be expensed over the four-year vesting period will be $ 5.3 million which will be expensed ratably over the four-year vesting period.

Stock Options:

1 unchanged sentence

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.

September 28, 2025, the total remaining cost will be $ 7.5 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.

5 unchanged sentences

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

Earnings for basic earnings per common share calculation $ 32,436 $ 47,884 $ 70,674 $ 82,977

Earnings per common share calculated for the third quarter and first nine months of 2025 and 2024 is as follows:

($ and shares in thousands, except per share data) Third Quarter Ended

Nine Months Ended

September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Net income attributable to common shares $ 35,303 $ 40,866 $ 105,977 $ 123,843

Weighted average common shares outstanding - basic 32,381 32,610 32,523 32,559

9 unchanged sentences

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.

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

A summary of total debt outstanding at September 28, 2025 and December 31, 2024 is as follows:

($ in thousands) September 28, 2025 December 31, 2024

Long-term debt:

13 unchanged sentences

Total long-term debt, less current maturities, net $ 1,320,343 $ 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.

As of September 28, 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 September 28, 2025 was the Secured Overnight Financing Rate (“SOFR”) plus 1.75 % (or 5.91 %) for the SOFR-based option.

The fee payable on committed but unused portions of the Revolver due 2029 was 0.225 % as of September 28, 2025.

Total cash interest paid was $ 4.0 million and $ 38.6 million for the third quarter and nine months ended September 28, 2025, respectively, and $ 4.7 million and $ 44.9 million for the third quarter and nine months ended September 29, 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.

As of September 28, 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 October 1, 2025 to December 31, 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 1.75 % Convertible Notes converted during the period from January 1, 2025 to September 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.

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

The following table presents fair values of certain assets and liabilities as of September 28, 2025 and December 31, 2024:

September 28, 2025 December 31, 2024

($ in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

11 unchanged sentences

$ — $ — $ 3.2 $ — $ — $ 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.

(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 September 28, 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 September 28, 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".

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.

The effective tax rate in the third quarter of 2025 and 2024 was 26.2 % and 24.8 %, respectively, and the effective tax rate for the comparable nine month periods was 23.1 % and 21.6 %, respectively.

The first nine 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 $ 3.4 million and $ 6.7 million, respectively.

Cash paid for income taxes, net of refunds, was $ 1.1 million and $ 23.4 million in the third quarter and first nine months of 2025, respectively, and $ 18.2 million and $ 37.4 million in the third quarter and first nine 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.

In accordance with Accounting Standards Codification (“ASC”) 740, “Income Taxes,” the Company has recognized the effects of the OBBBA during the current quarter for the provisions currently enacted, which has increased the Company’s deferred tax liability.

The Company anticipates that the OBBBA will reduce its federal income tax liability and related tax payments for the current and future years but will not have a significant impact on its annual effective tax rate.

SEGMENT INFORMATION

17 unchanged sentences

polymer-based and other flooring;

electrical systems components including instrument and dash panels;

electrical systems

components including instrument and dash panels;

wrapped vinyl, paper and hardwood profile mouldings;

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thermoformed shower surrounds;

specialty bath and

closet building products;

specialty bath and closet building products;

fiberglass and plastic helm systems and components products;

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The following tables summarize key financial information by segment:

Second Quarter Ended June 29, 2025

Third Quarter Ended September 28, 2025

($ in thousands) Manufacturing Distribution Total

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Elimination of inter-segment profits ( 3,273 )

Other expense 24,420

Consolidated income before income taxes $ 47,842

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Depreciation and amortization $ 35,792 $ 4,531 $ 40,323

Second Quarter Ended June 30, 2024

Third Quarter Ended September 29, 2024

($ in thousands) Manufacturing

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$ 36,316 $ 4,017 $ 40,333

Six Months Ended June 29, 2025

Nine Months Ended September 28, 2025

($ in thousands) Manufacturing Distribution Total

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Depreciation and amortization $ 108,708 $ 13,662 $ 122,370

Six Months Ended June 30, 2024

Nine Months Ended September 29, 2024

($ in thousands) Manufacturing Distribution Total

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Depreciation and amortization $ 107,406 $ 11,405 $ 118,811

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

A reconciliation of certain line items pertaining to the total reportable segments to the condensed consolidated financial statements in the third quarter and first nine months ended September 28, 2025 and September 29, 2024, and as of September 28, 2025 and December 31, 2024 is as follows:

Third Quarter Ended

Nine Months Ended

($ in thousands) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Total sales for reportable segments $ 981,863 $ 924,431 $ 3,044,444 $ 2,886,867

Elimination of inter-segment sales ( 6,232 ) ( 4,987 ) ( 17,839 ) ( 17,307 )

( 6,454 ) ( 22,844 ) ( 11,607 ) ( 42,364 )

Consolidated net sales $ 975,631 $ 919,444 $ 3,026,605 $ 2,869,560

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Consolidated capital expenditures $ 26,298 $ 17,853 $ 64,744 $ 50,264

(1) Eliminations for the second quarter and six months ended June 29, 2025 include only the elimination of inter-segment transactions.

($ in thousands) June 29, 2025 December 31, 2024

($ in thousands) September 28, 2025 December 31, 2024

Total assets:

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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.

As of September 28, 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

Third Quarter Ended

Nine Months Ended

($ in millions, except average price data) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Shares repurchased — — 377,612 —

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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.

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.

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 1. Financial Statements