Patrick Industries, Inc. (PATK) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presented strong financial performance, with significant revenue growth in RV, marine, and powersports sectors, and improved margins. The Q&A revealed positive sentiment with management addressing concerns about cost pressures and growth drivers. The company is well-positioned for future growth with improved operating margins and scalability. Despite some cautious responses, the overall outlook is optimistic, particularly with strong earnings and guidance. Given the market cap, the stock price is likely to react positively, within the 2% to 8% range over the next two weeks.
Key Financial Performance
Net Sales (Q4 2025) $924 million, a 9% increase year-over-year, driven by solid organic growth and acquisitions, partially offset by wholesale shipment declines in RV, marine, and housing markets.
Adjusted Earnings Per Diluted Share (Q4 2025) $0.84, including approximately $0.06 of dilution from convertible notes and related warrants, a 62% increase year-over-year.
Net Sales (Full Year 2025) Approximately $4 billion, a 6% increase year-over-year, driven by content per unit gains and acquisitions.
Adjusted Earnings Per Diluted Share (Full Year 2025) $4.44, including $0.26 of dilution from convertible notes and related warrants, a 2% increase year-over-year.
Free Cash Flow (2025) $246 million, supported by strong cash flow generation, enabling reinvestment in the business and strategic acquisitions.
Dividend Increase (2025) 17.5% increase, reflecting confidence in cash flows and market resilience.
RV Revenue (Q4 2025) $392 million, a 10% increase year-over-year, with RV content per wholesale unit increasing 13% year-over-year.
Marine Revenue (Q4 2025) $150 million, a 24% increase year-over-year, outperforming a 1% decrease in estimated wholesale marine powerboat unit shipments.
Powersports Revenue (Q4 2025) $109 million, a 39% increase year-over-year, driven by demand for cabin closure solutions and feature-rich units.
Housing Revenue (Q4 2025) $272 million, a 5% decrease year-over-year, outperforming a 10% decrease in MH shipments and housing starts.
Aftermarket Sales (2025) Increased approximately 30% year-over-year, now representing 10% of total revenues compared to 8% in 2024.
Gross Margin (Q4 2025) 23%, an increase from 22.1% in the prior year, driven by leveraging fixed cost structure and accretive acquisitions.
Adjusted Operating Margin (Q4 2025) 6.3%, a 110 basis point increase year-over-year, driven by stronger revenue and increased gross profit.
Adjusted EBITDA (Q4 2025) $105 million, a 17% increase year-over-year, with an adjusted EBITDA margin of 11.4%.
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Operating Highlights
Product Development and Innovation: Focused on product development and innovation efforts over the past two years, leading to meaningful content growth with 2026 model year changes.
Composites: Acquired Elkhart Composites to complement existing investments in composites, highlighting benefits over standard wood products in RV and marine industries.
Virtual Design Technology: Introduced 'The Experience,' a full-scale virtual design and reality solution for customizable life-size design product solutions.
Marine Market Expansion: Acquired Medallion Instrumentation Systems, Quality Engineered Services, Aegis Group, and Lillipad Marine to enhance marine full solutions platform.
Aftermarket Expansion: Increased presence in aftermarket business with over 500 SKUs on RecPro site and formalized unified aftermarket strategy.
Financial Performance: Net sales increased 9% in Q4 to $924 million, driven by organic growth and acquisitions. Full-year net sales rose 6% to $4 billion.
Operational Efficiency: Improved gross margin to 23% in Q4 and adjusted operating margin to 6.3%, supported by content gains and acquisitions.
Capital Allocation: Executed a disciplined capital allocation strategy, including $122 million in acquisitions, $87 million returned to shareholders, and strategic investments in composites.
Leadership Transition: Transitioned CFO role to Matt Filer, emphasizing financial expertise and organizational leadership for future positioning.
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Risk or Challenges
Macroeconomic Uncertainty: The company faces challenges due to macroeconomic uncertainty, including tariff volatility, which has led to cautious consumer behavior and impacted demand in key markets.
Tariff Environment: Tariffs and other governmental actions have negatively impacted the use of wood products in RV and marine industries, creating challenges for the company.
Dealer Inventory Levels: Dealer inventory levels remain lean across RV and marine markets, which could constrain sales and production efficiency.
Capacity Constraints in Composites: The company anticipates capacity constraints in composites, which could limit their ability to meet demand despite strategic investments in inventory.
Interest Rate Sensitivity: The company acknowledges that a meaningful retail demand inflection depends on improvements in consumer confidence and interest rates, which remain uncertain.
Wholesale Shipment Declines: Wholesale shipment declines in RV, marine, and housing markets have partially offset the company's revenue growth.
Supply Chain Risks: Strategic investments in inventory highlight potential supply chain risks, particularly in composites and other critical materials.
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Guidance & Outlook
2026 RV retail registrations: Expected to be flat with wholesale unit shipments increasing low to mid-single digits.
2026 marine retail registrations: Expected to be flat with wholesale powerboat unit shipments up low single digits.
2026 powersports unit shipments: Expected to be up low single digits, with organic content estimated to be up low single digits, implying an overall mid- to high single-digit increase for the business.
2026 MH wholesale shipments: Expected to be flat to up 5%.
2026 total new housing starts: Expected to be flat to up 5%.
2026 adjusted operating margin: Estimated to improve by 70 to 90 basis points versus 2025.
2026 operating cash flow: Estimated to be $380 million to $400 million.
2026 CapEx: Estimated to total between $70 million and $80 million.
2026 free cash flow: Expected to be approximately $300 million or more.
2026 full year tax rate: Estimated to be between 24% and 25%.
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Shareholder Return Plan
Dividend Increase: We further increased our dividend by 17.5% this year with our regular quarterly dividend in November, reflecting the strength and resilience of our model and our continued confidence in our cash flows in the markets we serve.
Share Repurchase: We returned $87 million to shareholders, including the repurchase of approximately 377,600 shares for a total of $32 million and $55 million in dividends. At the end of 2025, we had approximately $168 million remaining under our current share repurchase authorization.
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Key Q&A
Q:Can you elaborate on the meaningful increases in content per unit with the new model year changeovers?
A:The increases are a combination of larger and more content in units and share gains. On the marine side, there were pickups at model change, and on the RV side, higher-contented units started to come into play in the third and fourth quarters.
Q:What is driving the operating margin outlook expansion of 70-90 basis points?
A:The expansion is driven by a combination of volume increases, cost structure efficiency, content gains, and competitive pricing solutions. The company is well-positioned to support significant volume increases without adding significant overhead.
Q:What is the expected cadence of market shipment growth rates and margin improvement across verticals?
A:Inventory levels are lean, and Q1 is expected to be disciplined and thoughtful. An uptick is anticipated in Q2 and Q3 during the selling season. The company is optimistic about scalability and has prepared for an uptick by increasing inventory in Q4.
Q:What are you seeing in terms of cost pressures and their impact on affordability trends?
A:There is stability in pricing for most products, but some commodities like copper, aluminum, and wood (specifically Luan) are still fluctuating. The company is managing these fluctuations and expects to see results by May.
Q:How much of your growth is tied to pricing related to cost pressures versus mix and acquisitions?
A:Growth is primarily driven by mix and organic growth in content, with less impact from pricing in the near term.
Q:How much of the marine revenue growth was driven by acquisitions versus legacy business?
A:Most of the growth came from content gains and new product development, with a smaller portion attributed to acquisitions.
Q:What contributed to the content per unit increase in the RV segment during the quarter?
A:The increase was due to a combination of mix and market share gains during the model changeover. Larger units, such as fifth wheels, contributed more content, and there was a slight uptick in their production.
Q:What is driving the growth in content per unit in the powersports segment?
A:Growth is driven by increasing attachment rates across the utility platform, which continue to grow favorably.
Q:What is the progress and outlook for aftermarket and RecPro segments?
A:The company has added many SKUs, primarily in the RV segment, followed by marine and powersports. Two-thirds of the aftermarket sales growth came from acquisitions, including RecPro. Pull-through from new SKUs is expected to improve over the next 6-12 months with increased marketing efforts.
Q:What is the TAM for composites, and how does it compare to traditional wood products in terms of margins?
A:The long-term TAM for composites is about $1.5 billion, with $500 million attainable in the short term. The company did not disclose specific margin comparisons but is closely managing margins.
Q:What is the timeline for incremental pull-through from SKU additions in the aftersales segment?
A:It is a long-term process. While adding products to the site is straightforward, achieving pull-through requires marketing and advertising efforts. The company expects to gauge pull-through better in 6-12 months.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numbers or detailed breakdowns for several questions, such as the exact contribution of acquisitions to marine revenue growth, specific margin comparisons between composites and wood products, and incremental marketing spend for the RecPro initiative. Additionally, responses to questions about future mix trends and the timeline for SKU pull-through were cautious and lacked precise details.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Aegis
Chief
Elkhart
Enthusiast market
Experience
Nemeth CEO
Officer
Outdoor Enthusiast
Roeder
Sportech
alignment
allocation customer
average week
capability
collaboration
commitment
component
connectivity
dedication
design
feature
foot
generation
inventory restock
launch
marine
market aftermarket
market condition
market share
passion
platform product
product portfolio
product solution
reality
restock unit
revenue decrease
sale content
scalability
showcase
solution platform
technology
term value
uncertainty tariff
PATK Transcript
Patrick Industries, Inc. (PATK) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call presented strong financial performance, with significant revenue growth in RV, marine, and powersports sectors, and improved margins. The Q&A revealed positive sentiment with management addressing concerns about cost pressures and growth drivers. The company is well-positioned for future growth with improved operating margins and scalability. Despite some cautious responses, the overall outlook is optimistic, particularly with strong earnings and guidance. Given the market cap, the stock price is likely to react positively, within the 2% to 8% range over the next two weeks.
Patrick Industries, Inc. (PATK) Q3 2025 Earnings Call Transcript
Positive10-30
The earnings call summary and Q&A indicate positive sentiment. The company is investing in innovation, automation, and new products, with a focus on growth in composites and aftermarket strategies. Despite some inefficiencies, gross margins are improving, and restocking is anticipated. Analysts seem satisfied with management's responses, and the company's strategic investments and partnerships suggest a favorable outlook, leading to a positive stock price prediction.
Patrick Industries, Inc. (PATK) Q2 2025 Earnings Call Transcript
Unknown8-5
The earnings call presented a mixed outlook. Positive aspects include product innovation, strategic acquisitions, and a robust aftermarket initiative. However, the reduction in cash flow due to a legal settlement, declining market expectations in RV and marine sectors, and stable but not growing operating margins offset these positives. The Q&A section provided some optimism with stabilizing inventories and new product developments, but also highlighted uncertainties in pricing, inflation, and dealer restocking decisions. Given the market cap, the overall sentiment is neutral, expecting little movement in the stock price.
Patrick Industries, Inc. (PATK) Q1 2025 Earnings Call Transcript
Unknown5-1
The earnings call presents a mixed picture: positive financial performance with revenue and EPS growth, but challenges like margin pressure, tariff exposure, and demand fluctuations. The Q&A reveals management's uncertainty in addressing tariffs and consumer confidence issues. Despite strong revenue growth and shareholder returns, the company's guidance on margins and market outlooks are cautious. Given the market cap and mixed signals, a neutral stock price movement is expected over the next two weeks.
PATK Slides
PATK Report
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