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PATRICK INDUSTRIES INC (PATK)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean top-line beat and an adjusted EPS beat against consensus, despite a GAAP EPS drag from a non-recurring legal settlement; net sales rose 3% to $1.048B and adjusted EPS was $1.50, beating S&P Global consensus ($1.43), while GAAP EPS was $0.96 due to the settlement . Results benefited from RV (+7%) and Housing (+3%) growth, offsetting modest declines in Marine (-1%) and Powersports (-7%) .
  • Operating margin held flat YoY at 8.3%, while gross margin expanded 110 bps YoY to 23.9% on acquisitions, labor discipline, and automation initiatives; adjusted EBITDA rose 4% to $135M, with margin up 10 bps to 12.9% .
  • Guidance was largely reaffirmed: adjusted operating margin 7.0–7.3% (unchanged), FY tax rate ~24–25%, and capex $70–$80M; operating cash flow was trimmed to $330–$350M due to the legal settlement (from $350–$370M), implying ≥$250M FCF .
  • Strategic narrative: continued momentum in full solutions and Advanced Product Group (composite RV roofing, power bimini systems, powersports windshields) and aftermarket expansion via RecPro, with liquidity of $835M and net leverage of 2.6x positioning the company to pursue accretive M&A .

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted EPS ($1.50) and revenue ($1.048B) beat consensus, driven by RV and Housing growth, margin-accretive acquisitions, and automation; “adjusted EPS increased 4% to $1.50” and gross margin reached 23.9% (+110 bps YoY) .
    • Strong organic and share/content gains: total revenue growth included 2% share/content gains, and RV content per unit sequentially improved; CEO noted >$100M of 2026 model-year wins and innovation via Advanced Product Group .
    • Capital returns and balance sheet strength: $23M buybacks, $13M dividend, liquidity $835M, net leverage 2.6x; CFO emphasized flexibility with no major maturities until 2028 .

  • What Went Wrong

    • GAAP EPS declined YoY to $0.96 on a non-product legal settlement (pre-tax $24.4M), which also forced a reduction to operating cash flow guidance .
    • Softer volumes in higher-margin Marine and Powersports tempered operating margin leverage, keeping operating margin flat YoY at 8.3% .
    • Back-half wholesale expectations: RV shipments expected to seasonally slow in H2; Marine wholesale only modestly improving despite soft retail, limiting near-term upside .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$1.017 $1.003 $1.048
GAAP Diluted EPS ($)$1.44 $1.11 $0.96
Adjusted Diluted EPS ($)$1.44 $1.11 $1.50
Operating Margin (%)8.3% 6.5% 8.3%
Gross Margin (%)~22.8% (implied; 110 bps lower than 23.9%) 22.8% 23.9%
EBITDA ($USD Millions)$126.2 $108.2 $104.9
Adjusted EBITDA ($USD Millions)$130.1 $115.6 $135.4
Adjusted EBITDA Margin (%)12.8% (implied) 11.5% 12.9%

Segment revenue and key KPIs (Q2 2025):

SegmentQ2 2025 Revenue ($USD Millions)YoY ChangeSelected KPI
RV (46% of revenue)$479 +7% Content/wholesale unit TTM $4,952 (flat YoY; +2% vs Q1)
Marine (15%)$156 -1% Content/powerboat unit TTM $4,012 (+2% YoY; +1% vs Q1)
Powersports (9%)$96 -7% OEM attachment rates rising for premium utility content
Housing (30%)$315 +3% MH wholesale units +3% YoY; housing starts -1%

KPIs and balance sheet:

KPIQ2 2025Notes
Cash from Operations YTD ($USD Millions)$189.5 YTD through Q2
Capex Q2 ($USD Millions)$18 Automation & innovation
Free Cash Flow TTM ($USD Millions)$261.9 Trailing twelve months
Liquidity ($USD Millions)$835 Revolver availability + cash
Total Debt ($USD Billions)~$1.3 End of Q2
Net Leverage (x)2.6x
Share Repurchases277,800 shares; >$23M
Dividend Paid$13M
RV Dealer Weeks on Hand~19–21 weeks (Q2) Below historical 26–30
Marine Dealer Weeks on Hand~20–22 weeks (Q2) Below historical 36–40
RV Retail vs Wholesale (Q2)~109.6k retail; ~92.9k wholesale; ~16.7k destock

Versus estimates (S&P Global):

MetricS&P Global ConsensusActualSurprise
Revenue ($USD Billions)$1.026*$1.048 +$0.021B (beat)*
Primary EPS ($)$1.43*$1.50 +$0.07 (beat)*

Note: Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Adjusted Operating Margin (%)FY 20257.0%–7.3% 7.0%–7.3% Maintained
Effective Tax Rate (%)FY 2025~24%–25%; ~26%/quarter for remaining 3Q ~24%–25%; ~26%/quarter for remaining 2Q Maintained (timing updated)
Operating Cash Flow ($USD Millions)FY 2025$350–$370 $330–$350 (legal settlement impact) Lowered
Capex ($USD Millions)FY 2025$70–$80 $70–$80 Maintained
Free Cash Flow ($USD Millions)FY 2025≥$270 ≥$250 Lowered
RV Wholesale UnitsCY 2025310k–330k 320k–335k Raised/tightened
Marine Retail/WholesaleCY 2025Retail down HSD–LDD; wholesale LSD decrease (revised from +5–10%) Unchanged (same outlook) Maintained
Powersports Wholesale / ContentCY 2025Wholesale down LDD; content up HSD Unchanged Maintained
MH Wholesale UnitsCY 2025Up mid-single digits (revised from +10–15%) Unchanged Maintained
Site-Built Housing StartsCY 2025Down ~10% YoY Unchanged Maintained
Dividend per Share ($)Quarterly$0.40 (Feb 3 declaration) $0.40 (Aug 15 declaration) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2025)Trend
Tariffs/macroQ1: ~15% COGS import exposure; active mitigation; pricing via good-better-best; moving sourcing out of China; revised end-market outlook Tariff uncertainty paused consumer activity in April; exposure ~15% COGS; tools to mitigate margin impact reiterated Continued mitigation; impact manageable
Supply chain/inventory disciplineQ1: RV weeks on hand 20–22; Marine 26–28; inventory build for selling season; OEM discipline Q2: RV 19–21; Marine 20–22; RV seasonal destock (~16.7k) Leaner channels; disciplined production
Product innovation/full solutionsQ1: Medallion acquisition; tower/electrical/audio integrated solutions Composite RV roofing; power bimini; powersports windshield; Advanced Product Group wins Expanding solutions portfolio
Aftermarket (RecPro)Q1: Aftermarket ~8% of 2024 revs; targeting double digits in 2025; seasonal skew >500 Patrick SKUs on RecPro; push into Marine DTC/distribution Growing DTC and cross-brand exposure
AI/technology initiativesLimited mention Q4/Q1Investments in advanced data analytics and AI-driven capabilities Emerging focus
Regulatory/legalQ4 normal cadenceQ2: Non-product legal settlement (double fatality) impacting GAAP EPS and cash flow One-time; adjusted metrics provided
M&A and leverageQ1: Pipeline cultivated; willing to flex leverage for right deals, delever within 2–3 quarters Comfortable at 2.6x; can stretch >3x for strategic deals, target back to 2.25–2.5x Opportunistic stance maintained

Management Commentary

  • “Our performance and results, which included net sales and adjusted EPS growth, reflect our team's disciplined execution in what remains a very dynamic business environment… investments in the aftermarket through RecPro… strong cash flows, solid balance sheet with ample liquidity… position us to accelerate growth when the retail market inflection occurs.” — CEO Andy Nemeth .
  • “Patrick's diversified model continued to demonstrate its resilience… following the tariff announcements in April. Despite the tariff uncertainty, our markets behaved largely in line with expectations.” — Jeff Rodino, President – RV .
  • “Gross margin was 23.9%, up 110 bps… reflecting diversification, margin-accretive aftermarket (RecPro), disciplined labor management, and returns on CapEx and automation.” — CFO Andy Roeder .
  • “We’ve secured over $100 million in new business tied to the 2026 model year… including composite roofing for RVs, a new pontoon tower with our Power Bimini, and a new windshield program in powersports.” — CEO Andy Nemeth .

Q&A Highlights

  • End-market cadence: RV wholesale to seasonally slow in H2; Marine wholesale could see modest H2 uptick after significant inventory destock; marine inventories ~20–22 weeks .
  • Cash flow guidance: Reduction to operating cash flow solely due to the legal settlement; otherwise outlook unchanged .
  • Tariffs and pricing: Low-to-mid-single-digit price increases in some lines are likely; extensive mitigation via sourcing shifts and good-better-best offerings to protect margins .
  • Aftermarket visibility: >500 Patrick SKUs listed on RecPro; DTC and dealer distribution channels offer market read-through; majority of products serve upgrades/refurbish rather than only new-unit attachments .
  • M&A/leverage: Comfortable at 2.6x; can temporarily exceed 3x for the right acquisition, with plan to return to ~2.25–2.5x in 2–3 quarters .
  • Tax/regulatory: Recent legislation viewed as tailwind rather than headwind; no change to capital allocation mindset .

Estimates Context

  • Revenue beat: $1.048B actual vs $1.026B consensus (+$21M); EPS beat: $1.50 adjusted vs $1.43 consensus (+$0.07). Beats driven by gross margin expansion and share/content gains in RV and Housing, offsetting softer Marine/Powersports volumes . Values retrieved from S&P Global.*

  • Forward quarters: Company’s Q3 actuals subsequently exceeded EPS and revenue consensus, reinforcing execution consistency; EPS dilution from converts/warrants rose with share price, a consideration for reported diluted EPS going forward . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mix and margin resilience: Despite softer Marine/Powersports volumes, margin-accretive initiatives (RecPro, automation) sustained operating margin and expanded gross margin; this underpins EPS durability in a choppy macro .
  • Secular content gains: Advanced Product Group and full solutions model are unlocking tangible platform wins and higher content per unit, supporting multi-year share gains across RV, Marine, and Powersports .
  • Balance sheet optionality: $835M liquidity and 2.6x net leverage enable opportunistic M&A and continued shareholder returns, with flexibility to temporarily lever up for accretive deals .
  • Guidance largely intact: Margin and tax guidance maintained; cash flow trimmed only due to one-time settlement. H2 RV seasonality and Marine stabilization temper near-term upside but set up for 2026 inflection .
  • Aftermarket flywheel: RecPro’s SKU expansion and marine DTC push create countercyclical revenue streams and higher-margin growth vectors that should compound through 2026 .
  • Tariffs manageable: Sourcing shifts, pricing discipline, and product stratification should mitigate tariff pressure on margins; monitor incremental price pass-throughs in model-year 2026 negotiations .
  • EPS optics: Expect continued “accounting” dilution in diluted EPS tied to share price and converts/warrants; economic dilution is hedged, but reported EPS optics may vary quarter to quarter .
Sources: Q2 2025 8-K and press release **[76605_0000076605-25-000172_patk2025-q2991.htm:1]** **[76605_0000076605-25-000172_patk2025-q2991.htm:3]** **[76605_0000076605-25-000172_patk2025-q2991.htm:7]** **[76605_0000076605-25-000172_patk2025-q2991.htm:9]** **[76605_0000076605-25-000172_patk2025-q2991.htm:10]**; Q2 2025 earnings call transcript **[0000076605_2209795_1]** **[0000076605_2209795_3]** **[0000076605_2209795_5]** **[0000076605_2209795_6]** **[0000076605_2209795_7]** **[0000076605_2209795_9]** **[0000076605_2209795_10]** **[0000076605_2209795_11]** **[0000076605_2209795_13]** **[0000076605_2209795_14]**; Q1 2025 press release/8-K/call **[76605_20250501DE77284:5]** **[76605_20250501DE77284:11]** **[76605_20250501DE77284:12]** **[76605_PATK_3424694_3]** **[76605_PATK_3424694_5]** **[76605_PATK_3424694_6]** **[76605_PATK_3424694_7]** **[76605_PATK_3424694_9]** **[76605_PATK_3424694_23]**; Q4 2024 press release **[76605_20250206DE12850:3]**; Dividend press release **[76605_20250815DE52005:0]**.  
S&P Global estimates: Values retrieved from S&P Global.*