Patrick Signs Definitive All-Stock Merger With LCI
Net sales were $1.04 billion as Marine and Powersports growth offset a 15% RV drop and operating margin compressed to 7.4%.
Patrick Industries (PATK), a component solutions provider for outdoor-enthusiast and housing OEMs, signed a definitive all-stock merger agreement with LCI Industries after the quarter ended, upgrading April discussions of a potential merger of equals.
Net sales were $1.04 billion, down less than 1% from $1.05 billion a year earlier. Growth of 22% in Marine, 28% in Powersports, and 2% in Housing predominantly offset a 15% decline in RV end-market revenue, which the company tied to a 16% drop in RV industry wholesale unit shipments. Sequentially, sales rose from $997 million in the first quarter of 2026.
Operating income was $77 million and operating margin was 7.4%, compared with $87 million and 8.3% a year earlier. Adjusted operating margin was 7.5%. The year-over-year decline partially reflected the RV shipment drop, higher oil and fuel prices and related surcharges, and merger-related costs. Adjusted EBITDA was $126 million, or a 12.1% margin, versus $135 million and 12.9% a year earlier.
Reported net income rose 34% to $43 million, or $1.28 a share, from $32 million, or $0.96, because the year-ago quarter included a $24.4 million legal settlement. Adjusted net income was $44 million, or $1.29 a share, compared with $51 million, or $1.50. Reported and adjusted diluted EPS included about $0.07 of dilution from convertible notes and related warrants, versus $0.03 a year earlier.
RV, 39% of revenue, generated $407 million. Trailing-12-month content per wholesale RV unit rose 7% to $5,303 and was flat versus the first quarter of 2026. Marine, 18% of revenue, generated $191 million against flat estimated powerboat unit shipments. Estimated content per powerboat unit rose 22% to $4,883 on a trailing-12-month basis and 5% versus the first quarter. Marine revenue growth accelerated from 14% in the first quarter.
Powersports, 12% of revenue, generated $123 million, reflecting demand for utility-focused units, increased OEM penetration, and stronger attachment rates for Sportech cab enclosures and other premium content. Housing, 31% of revenue, generated $320 million while estimated manufactured-housing unit shipments fell 8% and housing starts fell 1%. Estimated content per manufactured-housing unit was $6,673 on a trailing-12-month basis, flat year over year and up 1% versus the first quarter.
For the six months ended June 28, 2026, cash provided by operating activities was $69 million, compared with $189 million in the prior-year period, reflecting higher working-capital investment as inventory remained elevated in connection with its composite-products growth strategy. Free cash flow on a trailing-twelve-month basis was $128 million. Purchases of property, plant and equipment totaled $18 million in the second quarter.
The company returned $106 million to shareholders in the second quarter, including $15 million of dividends and $91 million of repurchases of 980,000 shares. Unused repurchase capacity was $62 million. Available liquidity was $691 million; total net leverage was 3.0x, and total debt was about $1.4 billion.
Chief Executive Officer Andy Nemeth said the company is not relying on a near-term market rebound and is focused on staying close to customers, aligning cost structure, advancing high-value growth initiatives, and pursuing M&A in key markets. He said Patrick is excited about the enhanced value proposition the combination with LCI Industries will create once the transaction is closed.
Stronger demand supports expansion as pricing diverges