PATRICK INDUSTRIES INC 10-Q

ITEM 1. FINANCIAL STATEMENTS PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) 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 Cost of goods sold 754,667 706,930 2,326,418 2,220,897 Gross profit 220,964 212,514 700,187 648,663 Operating expenses: Warehouse and delivery 44,449 37,865 135,106 114,053 Selling, general and administrative 86,022 75,783 273,159 244,617 Amortization of intangible assets 24,200 24,449 73,338 71,545 Total operating expenses 154,671 138,097 481,603 430,215 Operating income 66,293 74,417 218,584 218,448 Interest expense, net 18,451 20,050 56,432 60,483 Other expenses — — 24,420 — Income before income taxes 47,842 54,367 137,732 157,965 Income taxes 12,539 13,501 31,755 34,122 Net income $ 35,303 $ 40,866 $ 105,977 $ 123,843 Basic earnings per common share (1) $ 1.09 $ 1.25 $ 3.26 $ 3.80 Diluted earnings per common share (1) $ 1.01 $ 1.20 $ 3.08 $ 3.70 Weighted average shares outstanding – Basic (1) 32,381 32,610 32,523 32,559 Weighted average shares outstanding – Diluted (1) 35,081 33,961 34,440 33,445 (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) 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 Other comprehensive (loss) income, net of tax: Foreign currency translation (loss) gain ( 4 ) 43 ( 6 ) 14 Total other comprehensive (loss) income ( 4 ) 43 ( 6 ) 14 Comprehensive income $ 35,299 $ 40,909 $ 105,971 $ 123,857 See accompanying Notes to Condensed Consolidated Financial Statements. 4 Table of Contents PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ($ in thousands) September 28, 2025 December 31, 2024 ASSETS Current Assets: Cash and cash equivalents $ 20,698 $ 33,561 Trade and other receivables, net 278,374 178,206 Inventories 599,685 551,617 Prepaid expenses and other 53,135 59,233 Total current assets 951,892 822,617 Property, plant and equipment, net 412,118 384,903 Operating lease right-of-use assets 201,192 200,697 Goodwill 815,121 797,236 Intangible assets, net 753,484 802,889 Other non-current assets 13,368 12,612 Total assets $ 3,147,175 $ 3,020,954 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Current maturities of long-term debt $ 6,250 $ 6,250 Current operating lease liabilities 54,643 53,697 Accounts payable 222,037 187,915 Accrued liabilities 124,648 105,753 Total current liabilities 407,578 353,615 Long-term debt, less current maturities, net 1,320,343 1,311,684 Long-term operating lease liabilities 150,985 151,026 Deferred tax liabilities, net 83,140 61,346 Other long-term liabilities 16,623 14,917 Total liabilities 1,978,669 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, 33,276,895 and 33,567,048 issued and outstanding as of September 28, 2025 and December 31, 2024, respectively 206,324 202,353 Accumulated other comprehensive loss ( 932 ) ( 926 ) Retained earnings 963,114 926,939 Total shareholders' equity 1,168,506 1,128,366 Total liabilities and shareholders' equity $ 3,147,175 $ 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) Nine Months Ended ($ in thousands) September 28, 2025 September 29, 2024 Cash flows from operating activities Net income $ 105,977 $ 123,843 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 127,222 124,002 Stock-based compensation expense 15,167 14,367 Deferred income taxes 21,794 — Amortization of deferred debt financing costs 2,433 2,428 Loss (gain) on sale of property, plant and equipment 2,065 ( 402 ) Other ( 1,332 ) 309 Change in operating assets and liabilities, net of acquisitions of businesses: Trade and other receivables, net ( 96,274 ) ( 67,027 ) Inventories ( 38,052 ) 2,803 Prepaid expenses and other assets 3,904 ( 3,933 ) Accounts payable, accrued liabilities and other 55,667 27,800 Net cash provided by operating activities 198,571 224,190 Cash flows from investing activities Purchases of property, plant and equipment ( 64,744 ) ( 50,264 ) Proceeds from sale of property, plant and equipment 2,240 2,292 Business acquisitions, net of cash acquired ( 70,322 ) ( 411,566 ) Other investing activities ( 4,069 ) ( 25,863 ) Net cash used in investing activities ( 136,895 ) ( 485,401 ) Cash flows from financing activities Term debt repayments ( 3,125 ) ( 3,750 ) Borrowings on revolver 619,879 1,155,416 Repayments on revolver ( 609,879 ) ( 790,416 ) Stock repurchases under buyback program ( 31,969 ) — Cash dividends paid to shareholders ( 39,974 ) ( 37,071 ) Taxes paid for share-based payment arrangements ( 8,919 ) ( 17,116 ) Payment of contingent consideration from business acquisitions ( 48 ) ( 4,595 ) Proceeds from exercise of common stock options — 21 Other financing activities ( 504 ) ( 81 ) Net cash (used in) provided by financing activities ( 74,539 ) 302,408 Net (decrease) increase in cash and cash equivalents ( 12,863 ) 41,197 Cash and cash equivalents at beginning of year 33,561 11,409 Cash and cash equivalents at end of period $ 20,698 $ 52,606 See accompanying Notes to Condensed Consolidated Financial Statements. 6 Table of Contents PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) Third Quarter Ended September 28, 2025 ($ in thousands) Common Stock Accumulated Other Comprehensive Loss Retained Earnings Total 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 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 September 28, 2025 $ 206,324 $ ( 932 ) $ 963,114 $ 1,168,506 Third Quarter Ended September 29, 2024 ($ in thousands) Common Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at June 30, 2024 $ 198,138 $ ( 1,028 ) $ 901,394 $ 1,098,504 Net income — — 40,866 40,866 Dividends declared — — ( 12,324 ) ( 12,324 ) Other comprehensive income, net of tax — 43 — 43 Repurchase of shares for tax payments related to the vesting and exercising of share-based grants ( 2,233 ) — — ( 2,233 ) Stock-based compensation expense 4,625 — — 4,625 Balance at September 29, 2024 $ 200,530 $ ( 985 ) $ 929,936 $ 1,129,481 See accompanying Notes to Condensed Consolidated Financial Statements. 7 Table of Contents PATRICK INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Continued) Nine Months Ended September 28, 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 — — 105,977 105,977 Dividends declared — — ( 40,110 ) ( 40,110 ) Other comprehensive loss, net of tax — ( 6 ) — ( 6 ) Stock repurchases under buyback program ( 2,277 ) — ( 29,692 ) ( 31,969 ) 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 September 28, 2025 $ 206,324 $ ( 932 ) $ 963,114 $ 1,168,506 Nine Months Ended September 29, 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 — — 123,843 123,843 Dividends declared — — ( 36,985 ) ( 36,985 ) 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 September 29, 2024 $ 200,530 $ ( 985 ) $ 929,936 $ 1,129,481 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 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. 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 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 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 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: Customer 1 14 % 14 % 15 % 14 % Customer 2 13 % 14 % 15 % 15 % The Company had two major customers that accounted for the following trade receivables as of September 28, 2025 and December 31, 2024: As of September 28, 2025 December 31, 2024 Percentage of trade receivables, net: Customer 1 10 % 8 % Customer 2 10 % 6 % 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 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 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 10 Table of Contents 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): 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. 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: Third Quarter Ended September 28, 2025 ($ in thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 292,557 $ 132,984 $ 425,541 Marine 141,134 9,349 150,483 Powersports 93,964 3,854 97,818 Manufactured Housing 73,115 101,553 174,668 Industrial 117,831 9,290 127,121 Total $ 718,601 $ 257,030 $ 975,631 11 Table of Contents Third Quarter Ended September 29, 2024 ($ in thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 275,020 $ 121,476 $ 396,496 Marine 126,066 9,925 135,991 Powersports 84,487 2,903 87,390 Manufactured Housing 76,634 100,780 177,414 Industrial 113,319 8,834 122,153 Total $ 675,526 $ 243,918 $ 919,444 Nine Months Ended September 28, 2025 ($ in thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 969,799 $ 413,909 $ 1,383,708 Marine 424,907 31,115 456,022 Powersports 262,917 12,219 275,136 Manufactured Housing 230,979 299,362 530,341 Industrial 352,432 28,966 381,398 Total $ 2,241,034 $ 785,571 $ 3,026,605 Nine Months Ended September 29, 2024 ($ in thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 876,170 $ 391,050 $ 1,267,220 Marine 417,485 31,499 448,984 Powersports 264,795 9,115 273,910 Manufactured Housing 223,532 284,618 508,150 Industrial 344,799 26,497 371,296 Total $ 2,126,781 $ 742,779 $ 2,869,560 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. 12 Table of Contents NOTE 3. INVENTORY Inventories consisted of the following: ($ in thousands) September 28, 2025 December 31, 2024 Raw materials $ 333,684 $ 292,730 Work in process 20,616 18,157 Finished goods 111,584 103,318 Less: reserve for inventory excess and obsolescence ( 18,618 ) ( 16,456 ) Total manufactured goods, net 447,266 397,749 Materials purchased for resale (distribution products) 161,292 161,492 Less: reserve for inventory excess and obsolescence ( 8,873 ) ( 7,624 ) Total materials purchased for resale (distribution products), net 152,419 153,868 Total inventories $ 599,685 $ 551,617 NOTE 4. GOODWILL AND INTANGIBLE ASSETS 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 Balance at December 31, 2024 $ 680,246 $ 116,990 $ 797,236 Acquisitions 16,696 — 16,696 Adjustments to preliminary purchase price allocations 109 1,080 1,189 Balance at September 28, 2025 $ 697,051 $ 118,070 $ 815,121 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 Non-compete agreements 26,876 25,776 Patents 94,040 89,641 Trademarks 227,777 225,527 Intangible assets, gross 1,289,598 1,265,664 Less: accumulated amortization Customer relationships ( 485,239 ) ( 419,358 ) Non-compete agreements ( 21,668 ) ( 20,065 ) Patents ( 29,207 ) ( 23,352 ) Intangible assets, net $ 753,484 $ 802,889 Changes in the carrying value of intangible assets for the nine months ended September 28, 2025 by segment are as follows: 13 Table of Contents ($ in thousands) Manufacturing Distribution Total Balance at December 31, 2024 $ 671,131 $ 131,758 $ 802,889 Additions 22,338 — 22,338 Amortization ( 61,972 ) ( 11,366 ) ( 73,338 ) Adjustments to preliminary purchase price allocations 357 1,238 1,595 Balance at September 28, 2025 $ 631,854 $ 121,630 $ 753,484 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 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 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 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 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 Additions 500 3,001 2,300 3,131 Fair value adjustments ( 1,098 ) — ( 2,698 ) ( 1,900 ) Settlements ( 16 ) ( 36 ) ( 48 ) ( 4,976 ) Fair value at end of period $ 3,162 $ 4,765 $ 3,162 $ 4,765 14 Table of Contents 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) September 28, 2025 December 31, 2024 Accrued liabilities $ 800 $ 1,665 Other long-term liabilities 2,362 1,943 Total fair value of contingent consideration $ 3,162 $ 3,608 Maximum amount of contingent consideration $ 7,360 $ 8,618 2025 Acquisitions 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 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. 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. 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. 15 Table of Contents 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 $ 66,012 $ 319,073 $ 96,998 $ 416,071 Working capital holdback and other, net 481 — — — Contingent consideration (1) 1,202 — 2,030 2,030 Total consideration $ 67,695 $ 319,073 $ 99,028 $ 418,101 Assets Acquired: Trade receivables $ 3,896 $ 21,587 $ 2,256 $ 23,843 Inventories 10,317 20,611 19,011 39,622 Prepaid expenses & other 349 1,719 3,495 5,214 Property, plant & equipment 24,967 18,766 6,997 25,763 Operating lease right-of-use assets — 15,096 1,283 16,379 Identifiable intangible assets: Customer relationships 12,390 152,000 17,560 169,560 Non-compete agreements 1,100 2,000 2,375 4,375 Patents and developed technology 4,330 17,500 600 18,100 Trademarks 2,250 20,500 8,000 28,500 Liabilities Assumed: Current portion of operating lease obligations — ( 1,437 ) ( 586 ) ( 2,023 ) Accounts payable & accrued liabilities ( 8,600 ) ( 32,398 ) ( 4,312 ) ( 36,710 ) Operating lease obligations — ( 13,658 ) ( 699 ) ( 14,357 ) Deferred tax liabilities — ( 21,288 ) — ( 21,288 ) Total fair value of net assets acquired 50,999 200,998 55,980 256,978 Goodwill (2) 16,696 118,075 43,048 161,123 Total purchase price allocation $ 67,695 $ 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. 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. 16 Table of Contents Pro Forma Information (Unaudited) 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 $ 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 Net income $ 35,941 $ 41,031 $ 107,714 $ 125,789 Basic earnings per common share $ 1.11 $ 1.26 $ 3.31 $ 3.86 Diluted earnings per common share $ 1.02 $ 1.21 $ 3.13 $ 3.76 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 $ 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"): 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 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: 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 17 Table of Contents 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. 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 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 Numerator: Net income attributable to common shares $ 35,303 $ 40,866 $ 105,977 $ 123,843 Denominator: (1) Weighted average common shares outstanding - basic 32,381 32,610 32,523 32,559 Weighted average impact of potentially dilutive convertible notes 1,492 831 1,155 510 Weighted average impact of potentially dilutive warrants 916 175 504 58 Weighted average impact of potentially dilutive securities 292 345 258 318 Weighted average common shares outstanding - diluted 35,081 33,961 34,440 33,445 Earnings per common share: (1) Basic earnings per common share $ 1.09 $ 1.25 $ 3.26 $ 3.80 Diluted earnings per common share $ 1.01 $ 1.20 $ 3.08 $ 3.70 (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. 18 Table of Contents NOTE 8. DEBT 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: Term loan due 2029 $ 120,313 $ 123,438 Revolver due 2029 110,000 100,000 1.75 % convertible notes due 2028 258,722 258,750 4.75 % senior notes due 2029 350,000 350,000 6.375 % senior notes due 2032 500,000 500,000 Total debt 1,339,035 1,332,188 Less: convertible notes deferred financing costs, net ( 3,173 ) ( 3,915 ) Less: term loan deferred financing costs, net ( 458 ) ( 543 ) Less: senior notes deferred financing costs, net ( 8,811 ) ( 9,796 ) Less: current maturities of long-term debt ( 6,250 ) ( 6,250 ) Total long-term debt, less current maturities, net $ 1,320,343 $ 1,311,684 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 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 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. 19 Table of Contents NOTE 9. FAIR VALUE MEASUREMENTS 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 1.75 % convertible notes due 2028 (1) $ — $ 419.0 $ — $ — $ 351.3 $ — 4.75 % senior notes due 2029 (1) $ — $ 344.2 $ — $ — $ 330.3 $ — 6.375 % senior notes due 2032 (1) $ — $ 506.9 $ — $ — $ 485.0 $ — Term loan due 2029 (1) (2) $ — $ 120.3 $ — $ — $ 123.4 $ — Revolver due 2029 (1) (2) $ — $ 110.0 $ — $ — $ 100.0 $ — Contingent consideration (3) $ — $ — $ 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 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". NOTE 10. INCOME TAXES 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. 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. 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 20 Table of Contents 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 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. 21 Table of Contents The following tables summarize key financial information by segment: Third Quarter Ended September 28, 2025 ($ in thousands) Manufacturing Distribution Total Total net sales $ 722,826 $ 259,037 $ 981,863 Cost of goods sold 564,041 199,270 763,311 Gross profit $ 158,785 $ 59,767 $ 218,552 Operating expenses 74,380 36,584 110,964 Operating income $ 84,405 $ 23,183 $ 107,588 Reconciliation of reportable segment operating income to consolidated income before income tax: Selling, general and administrative 20,460 Amortization of intangible assets 24,108 Interest expense, net 18,451 Elimination of inter-segment profits ( 3,273 ) Consolidated income before income taxes $ 47,842 Capital expenditures $ 19,440 $ 227 $ 19,667 Depreciation and amortization $ 35,792 $ 4,531 $ 40,323 Third Quarter Ended September 29, 2024 ($ in thousands) Manufacturing Distribution Total Total net sales $ 685,296 $ 239,135 $ 924,431 Cost of goods sold 531,503 185,905 717,408 Gross Profit $ 153,793 $ 53,230 $ 207,023 Operating expenses 67,364 29,830 97,194 Operating income $ 86,429 $ 23,400 $ 109,829 Reconciliation of reportable segment operating income to consolidated income before income tax: Selling, general and administrative 18,277 Amortization of intangible assets 24,433 Interest expense, net 20,050 Elimination of inter-segment profits ( 7,298 ) Consolidated income before income taxes $ 54,367 Capital expenditures $ 13,477 $ 2,520 $ 15,997 Depreciation and amortization $ 36,316 $ 4,017 $ 40,333 22 Table of Contents Nine Months Ended September 28, 2025 ($ in thousands) Manufacturing Distribution Total Total net sales $ 2,253,833 $ 790,611 $ 3,044,444 Cost of goods sold 1,746,369 596,969 2,343,338 Gross profit $ 507,464 $ 193,642 $ 701,106 Operating expenses 221,815 113,041 334,856 Operating income $ 285,649 $ 80,601 $ 366,250 Reconciliation of reportable segment operating income to consolidated income before income tax: Selling, general and administrative 76,344 Amortization of intangible assets 73,084 Interest expense, net 56,432 Elimination of inter-segment profits ( 1,762 ) Other expense 24,420 Consolidated income before income taxes $ 137,732 Capital expenditures $ 49,261 $ 781 $ 50,042 Depreciation and amortization $ 108,708 $ 13,662 $ 122,370 Nine Months Ended September 29, 2024 ($ in thousands) Manufacturing Distribution Total Total net sales $ 2,139,598 $ 747,269 $ 2,886,867 Cost of goods sold 1,650,887 585,850 2,236,737 Gross profit $ 488,711 $ 161,419 $ 650,130 Operating expenses 206,080 84,141 290,221 Operating income $ 282,631 $ 77,278 $ 359,909 Reconciliation of reportable segment operating income to consolidated income before income tax: Selling, general and administrative 70,854 Amortization of intangible assets 71,521 Interest expense, net 60,483 Elimination of inter-segment profits ( 914 ) Consolidated income before income taxes $ 157,965 Capital expenditures $ 31,757 $ 8,250 $ 40,007 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 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: 23 Table of Contents Third Quarter Ended Nine Months Ended ($ in thousands) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Net sales: 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 ) Consolidated net sales $ 975,631 $ 919,444 $ 3,026,605 $ 2,869,560 Depreciation and amortization: Depreciation and amortization for reportable segments $ 40,323 $ 40,333 $ 122,370 $ 118,811 Corporate depreciation and amortization 1,644 1,853 4,852 5,191 Consolidated depreciation and amortization $ 41,967 $ 42,186 $ 127,222 $ 124,002 Capital expenditures: Capital expenditures for reportable segments $ 19,667 $ 15,997 $ 50,042 $ 40,007 Corporate capital expenditures 6,631 1,856 14,702 10,257 Consolidated capital expenditures $ 26,298 $ 17,853 $ 64,744 $ 50,264 As of ($ in thousands) September 28, 2025 December 31, 2024 Total assets: Manufacturing segment assets $ 2,536,575 $ 2,402,533 Distribution segment assets 517,054 524,827 Corporate assets unallocated to segments 72,848 60,033 Cash and cash equivalents 20,698 33,561 Consolidated total assets $ 3,147,175 $ 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 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: 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 — Average price $ — $ — $ 84.66 $ — Aggregate cost $ — $ — $ 32.0 $ — 24 Table of Contents 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.