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PI

PATRICK INDUSTRIES INC (PATK)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean beat on revenue and EPS versus consensus, with net sales of $1.00B (+7% YoY) and diluted EPS of $1.11; EBITDA was slightly below consensus as mix and acquisition-related OpEx weighed on margins . Values retrieved from S&P Global for estimates.*
  • Adjusted operating margin contracted 50 bps YoY to 6.5% (vs 7.0% in Q1’24) as aftermarket seasonality and acquisition-related SG&A/warehouse costs offset gross margin expansion to 22.8% .
  • Management reduced 2025 shipment and margin outlooks: RV retail now down mid-to-high single digits with wholesale 310–330k; Marine retail down high-single to low double digits with wholesale down low single digits; MH wholesale up mid-single digits; 2025 adjusted operating margin now ~7.0–7.3% (down from prior improvement guide) .
  • Balance sheet/liquidity remain strong (net leverage 2.7x; $745M liquidity), enabling continued M&A and buybacks; Q1 capital returns totaled $22.5M (dividends $14M, repurchases $8.5M) .
  • Near-term stock narrative catalysts: tariff uncertainty and guidance reset vs. positive revenue/EPS beat and durable liquidity support offense (M&A/aftermarket scaling) .

What Went Well and What Went Wrong

What Went Well

  • RV revenue grew 14% to $479M (48% of sales), matching wholesale shipment growth and supported by share/content gains; RV CPU (TTM) held flat at $4,870 . “Our diversified business model continues to demonstrate its resilience and value…” — CEO Andy Nemeth .
  • Gross margin expanded ~90 bps YoY to 22.8% on acquisitions, labor management, and automation ROI, despite aftermarket seasonality .
  • Strong cash generation and disciplined capital allocation: operating cash flow $40M, TTM FCF $251M; liquidity $745M; ended quarter at 2.7x net leverage .

What Went Wrong

  • Adjusted operating margin fell 50 bps YoY to 6.5% on higher SG&A/warehouse/delivery costs from acquisitions and aftermarket seasonality (RecPro skews to Q2/Q3) .
  • Management lowered 2025 end-market outlooks across RV, Marine, MH, and site-built housing due to consumer confidence softening and tariff-related uncertainty; full-year adjusted operating margin now ~7.0–7.3% .
  • Segment commentary discrepancies: press release shows Marine revenue down 4% YoY and Powersports down 2%, while the call remarks referenced Marine +4% and Powersports +2%; we defer to the 8-K data .

Financial Results

Headline financials vs prior quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$919.4 $846.1 $1,003.4
Diluted EPS ($)$1.80 $0.42 $1.11
Gross Margin %23.1% 22.1% 22.8%
Operating Margin % (GAAP)8.1% 4.7% 6.5%
EBITDA ($USD Millions)$116.6 $82.1 $108.2
Adjusted EBITDA ($USD Millions)$121.2 $89.4 $115.6
Adjusted EBITDA Margin %13.2% 10.6% 11.5%

Year-over-year Q1 comparison

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$933.5 $1,003.4
Net Income ($USD Millions)$35.1 $38.2
Diluted EPS ($)$1.06 $1.11
Operating Margin % (GAAP)6.4% 6.5%
Adjusted Operating Margin %7.0% 6.5%
EBITDA ($USD Millions)$99.7 $108.2
Adjusted EBITDA ($USD Millions)$110.9 $115.6

Segment revenue breakdown

Segment ($USD Millions)Q3 2024Q4 2024Q1 2025
RV$396 $358 $479
Marine$136 $122 $149
Powersports$87 $78 $81
Housing (MH + Industrial)$300 $288 $295

KPIs and balance sheet/cash

KPIQ4 2024Q1 2025
RV CPU (TTM, $)$4,870 $4,870
Marine CPU (TTM, $)$3,967 $3,979
MH CPU (TTM, $)$6,604 $6,671
RV dealer inventory (weeks on hand)17–19 20–22
Marine dealer inventory (weeks on hand)23–25 26–28
Operating Cash Flow ($M)$326.8 FY’24 $40.1 Q1’25
Capex ($M)$75.7 FY’24 $20.2 Q1’25
TTM Free Cash Flow ($M)$251.2 FY’24 $251.4 TTM Q1’25
Net leverage (x)2.7x Q4’24 2.7x Q1’25
Liquidity ($M)$804 Q4’24 $745 Q1’25
Share repurchases/dividends ($M)$5 / $13 Q4’24 $8.5 / $14 Q1’25

Actuals vs Wall Street consensus

MetricQ4 2024 EstimateQ4 2024 ActualQ1 2025 EstimateQ1 2025 Actual
Revenue ($USD Millions)815.6846.1 960.81,003.4
Primary EPS ($)0.5270.52 0.9631.11
EBITDA ($USD Millions)91.582.1 109.6108.2

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Adjusted Operating Margin (%)FY 2025Up 70–90 bps vs 2024 (implying >7.9%) ~7.0–7.3% Lowered
Operating Cash Flow ($M)FY 2025$390–$410 $350–$370 Lowered
Capex ($M)FY 2025$75–$85 $70–$80 Lowered
Free Cash Flow ($M)FY 2025~$305+ ≥$270 Lowered
RV Retail UnitsFY 2025Flat Down mid-to-high single digits Lowered
RV Wholesale UnitsFY 2025~350k ~310k–330k Lowered
Marine Retail UnitsFY 2025Flat Down high-single to low double digits Lowered
Marine Wholesale UnitsFY 2025Up 5–10% Down low single digits Lowered
Powersports ShipmentsFY 2025Down ~10% Down low double digits; PATK content up high single digits Mixed (industry down more; PATK content up)
MH Wholesale UnitsFY 2025Up 10–15% Up mid-single digits Lowered
Site-Built Housing StartsFY 2025Flat to up 5% Down ~10% Lowered
Effective Tax Rate (%)FY 202524–25 24–25; ~26% for remaining quarters Maintained (quarterly cadence clarified)
DividendOngoing$0.40/share (Feb declaration) $0.40/share (May declaration) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024, Q-1: Q4 2024)Current Period (Q1 2025)Trend
Tariffs/macroProactive derisking China; contemplated incremental tariffs; no tariffs baked in FY’25 guide (Q4) Import exposure ~15% of COGS; plan to halve China exposure; multiple mitigation levers; tariffs baked into outlook assumptions Uncertainty rising; mitigation plans accelerating
Inventory discipline & mixDealers reducing weeks-on-hand; RV/Marine inventories lean; mix skew to entry-level units (Q3/Q4) RV weeks-on-hand 20–22; Marine 26–28; mix stable; cautious consumer Discipline persists; restock contingent on confidence
Aftermarket (RecPro)Acquisition synergies; seasonal low in Q4; accelerated product onboarding (Q3/Q4) Seasonal ramp in Q2/Q3; platform expansion across RV/Marine; potential countercyclical tailwind if new purchases slow Scaling; synergy capture underway
Automation/Advanced Product GroupEmphasis on innovation and composites; APG driving next-gen solutions (Q3) Continued investments; margin benefits cited in gross margin Structural enabler of margins/content
Powersports content/take ratesUtility segment more resilient; rising cabin enclosure attachment rates (Q3/Q4) Content up high single digits despite industry shipment declines; HVAC enclosures adoption growing Positive mix/content momentum
Marine mixHigher-engineered categories under pressure; content per unit down on mix (Q3) Wholesale down; retail down; cautious ordering; content sequentially higher (call remark) but press release shows CPU +2% vs Q4 Weak volumes; content improvement incremental

Management Commentary

  • CEO: “Our diversified business model continues to demonstrate its resilience and value, with strength in our RV and Housing markets offsetting lower demand from our Marine and Powersports customers.”
  • CEO business outlook: “Announced multi-country tariff rollout has resulted in higher levels of macroeconomic uncertainty… we believe this period… will reinforce our value proposition… harness our scale and flexibility…”
  • CFO on margins and seasonality: “On an adjusted basis, operating margin decreased 50 bps… driven by increased operating expenses as a result of acquisitions… first quarter seasonality low revenue stream of our growing aftermarket business, including RecPro.”
  • President – RV on mitigation: “We have stepped up our efforts in regards to tariffs… diversify, optimize sourcing and cost structure…”
  • CFO on liquidity/capital returns: “Total net liquidity… $745M… repurchased 99,800 shares ($8.5M) and returned $14M dividends.”

Q&A Highlights

  • Tariff exposure and offsets: Imports ~15% of COGS; plan to reduce China exposure by more than half; multiple levers (alternative sourcing, good-better-best, VA/VE) to mitigate margin impact; pricing selectively used alongside mitigation .
  • Volume-driven margin reset: Margin guide reduction driven primarily by lower volumes (RV down ~30k units; Marine down ~17k units vs prior midpoint), not incremental tariffs per se .
  • RV shipment cadence: Q1 wholesale up 14% reflected seasonal pre-selling restock; OEMs moderating production given retail softness; inventory weeks-on-hand increased modestly to 20–22 and remain below historical norms .
  • Cost levers and capacity: High variable cost structure flexing; targeted fixed cost reductions and some facility consolidations without impairing scalability; ability to pivot quickly if demand recovers .
  • Aftermarket tailwinds: RecPro expected to be countercyclical in downturns; platform integration progressing with marine products; aftermarket % of revenues targeted to move into double digits in 2025 (from ~8% in 2024) .

Estimates Context

  • Q1 2025: Revenue beat ($1,003.4M vs $960.8M); EPS beat ($1.11 vs $0.963); EBITDA slight miss ($108.2M vs $109.6M). Convertible notes/warrants diluted EPS by ~$0.05 . Values retrieved from S&P Global.*
  • Q4 2024: Revenue beat ($846.1M vs $815.6M); EPS in-line ($0.52 adjusted vs $0.527); EBITDA miss ($82.1M vs $91.5M) as Marine volumes/mix and strategic capacity retention weighed . Values retrieved from S&P Global.*
  • Implications: Consensus likely revises down 2025 operating margin, cash flow, and end-market shipments; aftermarket contributions and content gains may partially offset volume pressure.

Key Takeaways for Investors

  • Revenue/EPS execution was solid despite macro/tariff noise; the beat on top-line and EPS supports near-term resilience, but EBITDA underperformance flags ongoing margin pressures from mix and acquisition-related OpEx .
  • The comprehensive guidance reset (RV/Marine/MH/site-built, margin, cash flow) reframes 2025 expectations lower; monitor further tariff developments and consumer confidence indicators for inflection timing .
  • Aftermarket (RecPro) and content/share gains in RV/Powersports are strategic offsets; expect seasonal uplift in Q2/Q3 and incremental cross-selling benefits across end markets .
  • Liquidity and leverage provide offensive optionality (M&A) without compromising flexibility; Q1 buybacks/dividends underscore balanced capital returns .
  • Watch segment data quality: press release shows Marine (-4%) and Powersports (-2%) YoY, while call commentary cited increases; anchor on 8-K financials when discrepancies arise .
  • Tax rate step-up (to ~26% for remaining quarters) will pressure EPS quarter cadence vs Q1’s 17.7%; incorporate this into quarterly models .
  • Tactical positioning: Near term, favor risk-managed stance given reduced shipment/margin guides; medium term, thesis rests on aftermarket scaling, APG-driven innovation/content, and leverage of diversified model when demand normalizes .
Notes:
- Where call commentary conflicts with 8-K press release (e.g., Marine/Powersports revenue YoY), we defer to press release figures.
- All consensus estimate figures in the tables and commentary are sourced from S&P Global. *