Summary of Patrick Industries Q4 2025 Earnings Call

1Key Financial Results and Metrics

Q4 Net Sales: Increased 9% to $924 million, driven by organic growth and acquisitions, despite declines in wholesale shipments across RV, marine, and housing markets.

Adjusted EPS: Rose 62% to $0.84, with full-year adjusted EPS at $4.44, reflecting a 2% increase year-over-year.

Full-Year Net Sales: Approximately $4 billion, a 6% increase from 2024.

Free Cash Flow: $246 million for the year, with Q4 operating cash flow at $131 million.

Gross Margin: Improved to 23% in Q4 from 22.1% in the prior year; full-year margin at 23.1%.

Net Income: Q4 GAAP net income was $29 million, up from $15 million year-over-year; full-year net income decreased slightly to $135 million from $138 million.

Leverage Ratio: Reduced to 2.6x from 2.8x in Q3, with a target range of 2.25x to 2.5x.

2Strategic Updates and Business Highlights

Acquisitions: Welcomed four new companies, enhancing technology and aftermarket capabilities, including Medallion Instrumentation Systems and Quality Engineered Services.

Product Development: Continued focus on composites, with a strategic investment in Elkhart Composites, aiming to replace traditional wood products in RV and marine industries.

Aftermarket Growth: Increased presence with over 500 SKUs on RecPro, contributing to a 30% year-over-year increase in aftermarket sales.

Virtual Design Technology: Launched "The Experience," a virtual reality platform for product design collaboration with customers.

3Forward Guidance and Outlook

2026 Expectations:

RV retail registrations expected to be flat, with wholesale shipments increasing low to mid-single digits.

Marine and powersports markets anticipated to see similar low single-digit growth.

Housing market forecasts indicate flat to 5% growth in MH wholesale shipments and new housing starts.

Estimated adjusted operating margin improvement of 70-90 basis points for 2026.

Projected operating cash flow of $380 million to $400 million, with CapEx of $70 million to $80 million.

4Challenges and Points of Concern

Macroeconomic Uncertainty: Ongoing tariff environment and cautious consumer behavior impacting demand across end markets.

Declining Wholesale Shipments: Noted declines in RV, marine, and housing markets, with RV and marine shipments remaining below historical averages.

Cost Pressures: Continued volatility in commodity prices (copper, aluminum) and specific challenges with wood products, particularly Luon.

Inventory Management: Lean dealer inventories could limit immediate growth potential, requiring careful management as the market stabilizes.

5Notable Q&A Insights

Content Per Unit Growth: Increases attributed to both model year changes and share gains, with a mix of larger units contributing positively.

Margin Improvement Drivers: Expected expansion driven by volume increases and content gains rather than pricing adjustments.

Aftermarket Strategy: Long-term focus on marketing and advertising to drive pull-through from newly added SKUs, with expectations for incremental sales growth over the next 6-12 months.

Powersports Performance: Strong attachment rates and content per unit increases noted, particularly in utility-focused vehicles. Overall, Patrick Industries demonstrated resilience in a challenging environment, with strategic acquisitions and product innovations positioning the company for future growth, despite facing macroeconomic headwinds and inventory management challenges.