PATRICK INDUSTRIES INC (PATK)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations, financial condition and cash flows of Patrick Industries, Inc. This MD&A should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and Notes thereto included in Item 1 of this Report. In addition, this MD&A contains certain statements relating to future results which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. See “Information Concerning Forward-Looking Statements” on page 36 of this Report. The Company undertakes no obligation to update these forward-looking statements.

EXECUTIVE SUMMARY

Recent Events

On June 30, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with LCI Industries (“LCI”) and two wholly owned merger subsidiaries of the Company. The boards of directors of both the Company and LCI unanimously approved the Merger Agreement and the transactions contemplated thereby. Under the Merger Agreement, and subject to customary closing conditions, LCI will merge with subsidiaries of the Company and become a wholly owned subsidiary of the Company. At the effective time of the merger, each issued and outstanding share of LCI common stock, par value $0.01 per share, other than certain excluded shares, will be converted into the right to receive 1.2440 shares of the Company’s common stock, no par value, plus cash in lieu of fractional shares. Following completion of the transaction, existing Company shareholders are expected to own approximately 52% of the combined company, and existing LCI shareholders are expected to own approximately 48%. The transaction remains

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subject to customary closing conditions, including shareholder and regulatory approvals, and has not been completed as of the date of this filing.

In connection with the pending merger, the Company expects to incur additional transaction and integration-related costs, including legal, financial advisory, accounting, consulting, regulatory, filing and other related costs, some of which will be incurred regardless of whether the transaction is completed. The amount and timing of these costs cannot be estimated with certainty at this time and will depend on, among other things, the timing and outcome of required shareholder and regulatory approvals and integration planning. In addition, if the Merger Agreement is terminated under specified circumstances, the Company may be required to pay LCI a termination fee of $94.2 million. The Company expects to fund merger-related costs from cash on hand, cash from operations and/or borrowings under the revolving credit and term loan facility (the “2024 Credit Facility”).

Overview of Markets and Related Industry Performance

Three and Six Months Ended June 28, 2026 Financial Overview

Recreational Vehicle ("RV") Industry

The RV industry is the Company's primary market, and the Company’s RV products are sold primarily to major manufacturers of RVs, smaller original equipment manufacturers ("OEMs"), and to a lesser extent, manufacturers in adjacent industries. The principal types of recreational vehicles include (1) towables: conventional travel trailers, fifth wheels, folding camping trailers, and truck campers; and (2) motorized: class A (large motor homes), class B (van campers), and class C (small-to-mid size motor homes).

Net sales to the RV industry were 39% and 42% of the Company's net sales for the three and six months ended June 28, 2026, respectively, and 46% and 47% for the three and six months ended June 29, 2025, respectively. Net sales to the RV industry decreased 15% and 11% for the three and six months ended June 28, 2026, respectively, compared to the prior year periods.

According to the RV Industry Association ("RVIA"), RV wholesale unit shipments for the three months ended June 28, 2026 totaled approximately 77,600 units, a decrease of 16% compared to approximately 92,900 units for the three months ended June 29, 2025. We estimate that RV industry retail unit sales decreased 12% for the three months ended June 28, 2026 compared to the prior year period. Retail unit sales exceeded wholesale unit shipments in the three months ended June 28, 2026 as RV OEMs maintained lower production volumes.

According to the RVIA, RV wholesale unit shipments for the first six months of 2026 totaled approximately 163,600 units, a decrease of 14% from approximately 190,700 units for the first six months of 2025. While we estimate RV industry retail unit sales for the first six months of 2026 decreased by approximately 14% compared to the first six months of 2025, we estimate that wholesale unit shipments exceeded retail unit sales during the period, reflecting lower retail demand and a modest increase in dealer inventory levels.

Marine Industry

The Company’s sales to the marine industry are primarily focused on the powerboat sector of the market which is comprised of four main categories: fiberglass, aluminum fishing, pontoon and ski & wake.

Net sales to the marine industry were 18% of the Company's net sales for both the three and six months ended June 28, 2026, and 15% for both the three and six months ended June 29, 2025. Net sales to the marine industry increased 22% and 18% in the three and six months ended June 28, 2026, respectively, compared to the prior year periods.

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Our marine revenue is generally correlated to marine industry wholesale powerboat unit shipments. According to Company estimates based on data published by the National Marine Manufacturers Association ("NMMA"), wholesale powerboat unit shipments remained flat and decreased 2% for the three and six months ended June 28, 2026, respectively, compared to the prior year periods. We estimate that marine industry retail powerboat unit sales decreased 6% and 5% for the three and six months ended June 28, 2026, respectively, compared to the prior year periods, primarily due to the current macroeconomic environment faced by the end consumer, such as economic uncertainty and volatile oil prices.

Powersports Industry

Powersports is a category of motorsports which includes vehicles such as motorcycles, all-terrain vehicles ("ATVs"), side-by-sides, snowmobiles, scooters, golf carts and other personal transportation vehicles, and other related categories. Our powersports business is primarily focused on the utility and premium segments of the side-by-side market, which have been outperforming the more discretionary recreational segment. We also participate in the motorcycle and golf cart segments of the market. OEMs and dealers are actively managing field inventory levels to align dealer inventories with retail demand.

Net sales to the powersports industry were 12% and 11% of the Company's net sales for the three and six months ended June 28, 2026, respectively, and 9% for both the three and six months ended June 29, 2025. Net sales to the powersports industry increased 28% for both the three and six months ended June 28, 2026 compared to the prior year periods.

Manufactured Housing ("MH") Industry

The Company’s products for this market are sold primarily to major manufacturers of manufactured homes, other OEMs, and to a lesser extent, manufacturers in adjacent industries. Factors that may favorably impact demand in this industry include jobs growth, consumer confidence, favorable changes in financing regulations, a narrowing in the difference between interest rates on MH loans and mortgages on traditional residential "site-built" housing, and any improvement in conditions in the asset-backed securities markets for manufactured housing loans.

Net sales to the MH industry were 17% and 16% of the Company's net sales for the three and six months ended June 28, 2026, respectively, and 17% for both the three and six months ended June 29, 2025. Net sales to the MH industry decreased 4% and 7% for the three and six months ended June 28, 2026, respectively, compared to the prior year periods.

According to Company estimates based on industry data from the Manufactured Housing Institute, MH industry wholesale unit shipments decreased 8% in both the three and six months ended June 28, 2026 compared to the prior year periods.

Industrial Market

The industrial market is comprised primarily of U.S. residential housing market and non-housing market categories and includes kitchen cabinet, countertop, hospitality, retail and commercial fixtures, and office and household furniture markets and regional distributors.

Net sales to the industrial market were 14% and 13% of the Company's net sales for the three and six months ended June 28, 2026, respectively, and 13% and 12% for the three and six months ended June 29, 2025, respectively. Net sales to the industrial market increased 9% and 5% for the three and six months ended June 28, 2026, respectively, compared to the prior year periods.

Based on U.S. Census Bureau data, combined new housing starts decreased 1% for the second quarter of 2026 compared to the prior year period, reflecting an increase in multifamily housing starts of 8% and a decrease in single-family housing starts of 4%.

For the first six months of 2026, combined new housing starts increased 1% compared to the prior year period, reflecting a decrease in single-family housing starts of 5% and an increase in multifamily housing starts of 15%. Our industrial products are generally among the last components installed in new unit construction and as such our related sales typically trail new housing starts by four to six months.

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RESULTS OF OPERATIONS

Three and Six Months Ended June 28, 2026 Compared to 2025

The following table sets forth the percentage relationship to net sales of certain items on the Company’s Condensed Consolidated Statements of Income.

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto included in Item 8 of this Report. In addition, this MD&A contains certain statements relating to future results that are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. See “Information Concerning Forward-Looking Statements” on page 3 of this Report and Part I, Item 1A. "Risk Factors" for a discussion of risks and uncertainties. Patrick’s results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 along with components of change compared to the prior year that have been omitted under this item can be found in Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Form 10-K for the year ended December 31, 2024 filed with the SEC on February 20, 2025.

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EXECUTIVE SUMMARY

Overview of Markets and Related Industry Performance

Recreational Vehicle ("RV") Industry

The Company’s RV products are sold primarily to major manufacturers of RVs, smaller original equipment manufacturers ("OEMs"), and to a lesser extent, manufacturers in adjacent industries. The principal types of recreational vehicles include (1) towables: conventional travel trailers, fifth wheels, folding camping trailers, and truck campers; and (2) motorized: class A (large motor homes), class B (van campers), and class C (small-to-mid size motor homes).

The RV industry is our primary market and comprised 45% and 44% of the Company’s consolidated net sales for the years ended December 31, 2025 and 2024, respectively. Net sales to the RV industry increased 9% for the year ended December 31, 2025 compared to 2024. Following a dealer inventory restocking in the first half of 2024, OEMs reduced production levels slightly in the second half of the year as dealers actively managed inventory levels as retail demand softened. In 2025, dealer inventory dynamics continued to normalize, with inventory reductions moderating as dealer inventory levels moved closer to targeted levels.

According to the RV Industry Association (“RVIA”), RV industry wholesale unit shipments totaled approximately 342,200 units in 2025, an increase of 3% compared to approximately 333,700 units in 2024. According to Company estimates based on data from Statistical Surveys, Inc. ("SSI"), RV industry retail unit sales totaled approximately 348,700 units in 2025, a decrease of 2% compared to approximately 354,400 units in 2024.

Marine Industry

The Company’s sales to the marine industry are primarily focused on the powerboat sector of the market which is comprised of four main categories: fiberglass, aluminum fishing, pontoon and ski & wake.

Net sales to the marine industry comprised approximately 15% of the Company's consolidated net sales for each of the years ended December 31, 2025 and 2024. Net sales to the marine industry in the year ended December 31, 2025 increased 6% compared to 2024.

Our marine revenue is generally correlated to marine wholesale powerboat unit shipments. According to Company estimates based on data published by the National Marine Manufacturers Association ("NMMA"), wholesale powerboat unit shipments totaled approximately 140,100 units in 2025, a decrease of 4% compared to 146,000 units in 2024. According to SSI, we estimate marine retail powerboat shipments totaled approximately 152,300 units in 2025, a decrease of 8% compared to approximately 165,200 units in 2024.

Powersports Industry

Through acquisitions completed in recent years, the Company entered the powersports end market. Powersports is a category of motorsports which includes vehicles such as motorcycles, all-terrain vehicles ("ATVs"), side-by-sides, snowmobiles, scooters, golf carts and other personal transportation vehicles, and other related categories. Our powersports business is primarily focused on the utility and premium segments of the side-by-side market, which have been outperforming the more discretionary recreational segment. We also participate in the motorcycle and golf cart segments of the market. OEMs and dealers are actively managing field inventory levels to align dealer inventories with retail demand.

Net sales to the powersports industry comprised approximately 10% of the Company's consolidated net sales for each of the years ended December 31, 2025 and 2024. Net sales to the powersports industry increased 9% during the year ended December 31, 2025 compared to 2024.

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Manufactured Housing ("MH") Industry

The Company’s products for this market are sold primarily to major manufacturers of manufactured homes, other OEMs, and to a lesser extent, manufacturers in adjacent industries. Factors that may favorably impact demand in this industry include jobs growth, consumer confidence, favorable changes in financing regulations, a narrowing in the difference between interest rates on MH loans and mortgages on traditional residential "site-built" housing, and any improvement in conditions in the asset-backed securities markets for manufactured housing loans.

Net sales to the MH industry comprised approximately 17% and 18% of the Company's consolidated net sales for the years ended December 31, 2025 and 2024, respectively. Net sales to the MH industry decreased less than 1% during the year ended December 31, 2025 compared to 2024. MH sales are generally correlated to MH industry wholesale unit shipments. Based on industry data from the Manufactured Housing Institute, MH industry wholesale unit shipments totaled 102,700 units in 2025, a decrease of 1% compared to approximately 103,300 units in 2024.

Industrial Market

The industrial market is comprised primarily of U.S. residential housing market and non-housing market categories and includes kitchen cabinet, countertop, hospitality, retail and commercial fixtures, and office and household furniture markets and regional distributors.

Net sales to the industrial market comprised approximately 13% of the Company's consolidated net sales in both years ended December 31, 2025 and 2024. Net sales to the industrial market increased 4% during the year ended December 31, 2025 compared to 2024. Overall, our revenues in these markets are focused on residential and multifamily housing, hospitality, high-rise housing and office, commercial construction, institutional furniture markets and other non-housing categories.

During the year ended December 31, 2025, combined new housing starts decreased 2% compared to 2024, reflecting a decrease in single-family housing starts of 7%, partially offset by an increase in multifamily housing starts of 12%. Our industrial products are generally among the last components installed in new unit construction and as such our related sales typically trail new housing starts by four to six months.

CONSOLIDATED OPERATING RESULTS

The following table sets forth the percentage relationship to net sales of certain items on the Company’s consolidated statements of income for the years ended December 31, 2025 and 2024.

Year Ended December 31, 2025 Compared to 2024

Net Sales. Net sales in 2025 increased approximately $235.1 million, or 6%, to $3.95 billion compared to $3.72 billion in 2024. Net sales in 2025 increased due to increased sales to the RV, marine, powersports and industrial markets, partially offset by decreased sales to the MH market. Sales to the RV market increased $150.9 million, or 9%, to $1.78 billion in 2025

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compared to $1.63 billion in 2024, primarily due to industry volume growth and the Company’s acquisition of ICON Direct LLC, doing business as RecPro (“RecPro”) in the third quarter of 2024. Sales to the marine market increased $35.7 million, or 6%, to $606.4 million in 2025 compared to $570.7 million in 2024, primarily attributable to acquisitions completed in 2025, partially offset by a decrease in estimated powerboat wholesale unit shipments of 4% compared to 2024. The Company's sales to the powersports market increased $31.9 million, or 9%, in 2025 compared to 2024, primarily attributable to the continued growth of Patrick's attachment rates on premium utility vehicles and a recovery in utility vehicle wholesale unit shipments. Sales to the industrial market increased $17.2 million, or 4%, in 2025 compared to 2024, primarily attributable to market share gains and product mix shifts by certain customers. Sales to the MH market decreased $0.6 million, or less than 1%, to $681.5 million in 2025 compared to $682.1 million in 2024, due to a decrease in MH industry wholesale unit shipments of 1% compared to 2024.

In 2025 and 2024, net sales attributable to acquisitions completed in each of those years was $44.0 million and $295.7 million, respectively.

Cost of Goods Sold. Cost of goods sold increased $158.1 million, or 5%, to $3.04 billion in 2025 compared to $2.88 billion in 2024. As a percentage of net sales, cost of goods sold decreased 60 basis points during 2025 to 76.9% compared to 77.5% in 2024.

Cost of goods sold as a percentage of net sales decreased in 2025 compared to 2024 primarily as a result of continued cost reduction and automation initiatives we deployed throughout 2024 and into 2025 that had a positive impact on labor and overhead costs. The decrease in cost of goods sold as a percentage of net sales in 2025 reflects a 50 basis point decrease in labor and 20 basis point decrease in overhead as a percentage of net sales, partially offset by a 10 basis point increase in material as a percentage of net sales. In general, the Company's cost of goods sold percentage can be impacted from period-to-period by demand changes in certain market sectors that can result in fluctuating costs of certain raw materials and commodity-based components that are utilized in production.

Gross Profit. Gross profit increased $77.0 million or 9%, to $912.9 million in 2025 compared to $835.9 million in 2024. As a percentage of net sales, gross profit increased 60 basis points to 23.1% in 2025 compared to 22.5% in 2024. The increase in gross profit as a percentage of net sales in 2025 compared to 2024 reflects the impact of the factors discussed above under “Cost of Goods Sold”.

Economic or industry-wide factors affecting the profitability of our sales to the RV, marine, powersports, MH and industrial markets include the costs of commodities and supply chain constraints and

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