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What changed in PATRICK INDUSTRIES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PATRICK INDUSTRIES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+278 added−235 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-29)

Top changes in PATRICK INDUSTRIES INC's 2024 10-K

278 paragraphs added · 235 removed · 205 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

70 edited+26 added−9 removed33 unchanged
Biggest changeThe Company's principal executive and administrative offices are located at 107 West Franklin Street, Elkhart, Indiana 46516 and the telephone number is (574) 294-7511; Internet website address: www.patrickind.com . 4 Major Product Lines Patrick manufactures and distributes a variety of products within its reportable segments including: Manufacturing Distribution Laminated products for furniture, shelving, walls and countertops Pre-finished wall and ceiling panels Decorative vinyl, wrapped vinyl, paper laminated panels and vinyl printing Drywall and drywall finishing products Solid surface, granite and quartz countertops Interior and exterior lighting products Fabricated aluminum products Wiring, electrical and plumbing products Wrapped vinyl, paper and hardwood profile mouldings Transportation and logistics services Electrical systems components including instrument and dash panels Electronics and audio systems components Slide-out trim and fascia Cement siding Cabinet products, doors, components and custom cabinetry Raw and processed lumber Hardwood furniture Fiber reinforced polyester (“FRP”) products Fiberglass bath fixtures and tile systems Interior passage doors Specialty bath and closet building products Roofing products Boat towers, tops, trailers, and frames Laminate and ceramic flooring Softwoods lumber Shower doors Interior passage doors Fireplaces and surrounds Wiring and wire harnesses Appliances CNC molds and composite parts Tile Aluminum and plastic fuel tanks Marine hardware and accessories Slotwall panels and components Other miscellaneous products RV painting Thermoformed shower surrounds Fiberglass and plastic components including front and rear caps and marine helms Polymer-based and other flooring Air handling products Marine hardware and accessories Treated, untreated and laminated plywood RV and marine furniture Adhesives and sealants Audio systems and accessories, including amplifiers, tower speakers, soundbars, and subwoofers Marine non-slip foam flooring, padding, and accessories Protective covers for boats, RVs, aircraft, and military and industrial equipment Other miscellaneous products 5 Primary Markets Patrick manufactures and distributes its products for four primary end markets.
Biggest changeInformation on our website is not incorporated in this Annual Report on Form 10-K. 4 Table of Contents Major Product Lines Patrick manufactures and distributes a variety of products within its reportable segments including: Manufacturing Distribution Laminated products for furniture, shelving, walls and countertops Pre-finished wall and ceiling panels Decorative vinyl, wrapped vinyl, paper laminated panels and vinyl printing Drywall and drywall finishing products Solid surface, granite and quartz countertops Interior and exterior lighting products Fabricated aluminum products Wiring, electrical and plumbing products Wrapped vinyl, paper and hardwood profile mouldings Transportation and logistics services Electrical systems components including instrument and dash panels Electronics and audio systems components Slide-out trim and fascia Cement siding Cabinet products, doors, components and custom cabinetry Raw and processed lumber Hardwood furniture Fiber reinforced polyester (“FRP”) products Fiberglass bath fixtures and tile systems Interior passage doors Specialty bath and closet building products Roofing products Boat towers, tops, trailers, and frames Laminate and ceramic flooring Softwoods lumber Shower doors Interior passage doors Fireplaces and surrounds Wiring and wire harnesses Appliances CNC molds and composite parts Tile Aluminum and plastic fuel tanks Marine hardware and accessories Slotwall panels and components RV awnings, windows, fiberglass siding and roofing RV painting Marine windshields Thermoformed shower surrounds Other miscellaneous products Fiberglass and plastic components including front and rear caps and marine helms Polymer-based and other flooring Air handling products Marine hardware and accessories Treated, untreated and laminated plywood RV and marine furniture Adhesives and sealants Audio systems and accessories, including amplifiers, tower speakers, soundbars, and subwoofers Marine non-slip foam flooring, padding, and accessories Protective covers for boats, RVs, aircraft, and military and industrial equipment Windshield and wiper systems Roofs/canopies Integrated door systems Fender flares and rear panels Other miscellaneous products 5 Table of Contents Primary Markets Patrick manufactures and distributes its products for five primary end markets.
In addition, recent seasonal industry trends have been, and future trends may be, different than in prior years due to volatile economic conditions, interest rates, access to financing, cost of fuel, national and regional economic conditions and consumer confidence on retail sales of RVs and marine units and other products for which the Company sells its components, as well as fluctuations in RV and marine dealer inventories, increased volatility in demand from RV and marine dealers, the timing of dealer orders, and from time to time, the impact of severe weather conditions on the timing of industry-wide wholesale shipments.
In addition, recent seasonal industry trends have been, and future trends may be, different than in prior years due to volatile economic conditions, interest rates, access to financing, cost of fuel, national and regional economic conditions and consumer confidence on retail sales of RVs, powersports and marine units and other products for which the Company sells its components, as well as fluctuations in RV, powersports and marine dealer inventories, increased volatility in demand from RV, powersports and marine dealers, the timing of dealer orders, and from time to time, the impact of severe weather conditions on the timing of industry-wide wholesale shipments.
Our primary commitment to our team members in the production environment is to their safety, well-being and progress, and in this regard our human capital management programs focus on the following, in addition to our health care insurance and other employment benefits: • Free assistance programs available to all team members and their families to address mental health and other matters which arise, which we believe are essential during periods of uncertainty; • Tuition reimbursement programs available to all team members as they pursue educational opportunities; • Leadership programs available to all employees that are designed to foster leadership and communication skills to advance team members to the next stage of their careers; • Job safety analysis, which identifies risks unique to each production environment, training and empowering our team members to mitigate risks and develop workplace best practices; • Occupational Safety and Health Administration ("OSHA") preparedness, which involves site specific training development to educate and enable our team members to work safely and effectively; • Industrial hygiene audits and testing, ensuring that our team members work in healthy environments with respect to air quality and noise reduction; • Machine guarding and work area audits, which identify mechanical and non-mechanical improvements in the safety and well-being of the production environment; • Train-the-trainer programs, which foster best-practice operational techniques for our team members to advance their capabilities to operate our facilities in the safest and most effective manner; • Site-specific training development, which tailors customized training and consulting to the unique needs of the production environment; • Ergonomic assessments for all team members, which accommodate each individual to work in the most effective and comfortable manner; • Community involvement initiatives, such as our participation in Military Makeover and Care Camps, which provides our team members opportunities to give back to the communities in which we do business.
Our primary commitment to our team members in the production environment is to their safety, well-being and progress, and in this regard our human capital management programs focus on the following, in addition to our health care insurance and other employment benefits: • Free assistance programs available to all team members and their families to address mental health and other matters which arise, which we believe are essential during periods of uncertainty; • Tuition reimbursement programs available to all team members as they pursue educational opportunities; • Leadership programs available to all employees that are designed to foster leadership and communication skills to advance team members to the next stage of their careers; • Job safety analysis, which identifies risks unique to each production environment, training and empowering our team members to mitigate risks and develop workplace best practices; • Occupational Safety and Health Administration ("OSHA") preparedness, which involves site specific training development to educate and enable our team members to work safely and effectively; • Industrial hygiene audits and testing, ensuring that our team members work in healthy environments with respect to air quality and noise reduction; 11 Table of Contents • Machine guarding and work area audits, which identify mechanical and non-mechanical improvements in the safety and well-being of the production environment; • Train-the-trainer programs, which foster best-practice operational techniques for our team members to advance their capabilities to operate our facilities in the safest and most effective manner; • Site-specific training development, which tailors customized training and consulting to the unique needs of the production environment; • Ergonomic assessments for all team members, which accommodate each individual to work in the most effective and comfortable manner; • Community involvement initiatives, such as our participation in Military Makeover and Care Camps, which provides our team members opportunities to give back to the communities in which we do business.
The Company’s specialized team of designers, engineers and graphic artists works with RV, marine, MH and industrial customers to meet their creative design and product needs, including creating new styles and utilizing new colors, patterns, products, and materials for panels and mouldings, cabinet doors, furniture, lighting and other products.
The Company’s specialized team of designers, engineers and graphic artists works with RV, marine, powersports, MH and industrial customers to meet their creative design and product needs, including creating new styles and utilizing new colors, patterns, products, and materials for panels and mouldings, cabinet doors, furniture, lighting and other products.
Patrick's sales to the industrial market generally lag new 7 housing starts by four to six months as our industrial products are generally among the last components installed into new unit construction and will vary based on differences in regional economic prospects.
Patrick's sales to the industrial market generally lag new housing starts by four to six months as our industrial products are generally among the last components installed into new unit construction and will vary based on differences in regional economic prospects.
Company Overview Patrick is a leading component solutions provider for the recreational vehicle ("RV"), marine, manufactured housing ("MH") and various industrial markets – including single and multi-family housing, hospitality, institutional and commercial markets.
Company Overview Patrick is a leading component solutions provider for the recreational vehicle ("RV"), marine, powersports, manufactured housing ("MH") and various industrial markets – including single and multi-family housing, hospitality, institutional and commercial markets.
We believe that, as of December 31, 2023, the Company’s inventory levels are appropriately balanced with expected OEM production, and we will continue to manage inventory based on anticipated customer needs. Additionally, the Company continually explores alternative sources of raw materials and components, both domestically and from outside the U.S.
We believe that, as of December 31, 2024, the Company’s inventory levels are appropriately balanced with expected OEM production, and we will continue to manage inventory based on anticipated customer needs. Additionally, the Company continually explores alternative sources of raw materials and components, both domestically and from outside the U.S.
Seasonality Manufacturing operations in the RV, marine and MH industries historically have been seasonal and at their highest levels when the weather is moderate. Accordingly, the Company’s sales and profits had generally been the highest in the second 10 quarter and lowest in the fourth quarter.
Seasonality Manufacturing operations in the RV, marine, powersports and MH industries historically have been seasonal and at their highest levels when the weather is moderate. Accordingly, the Company’s sales and profits had generally been the highest in the second quarter and lowest in the fourth quarter.
For additional information on the Company's efforts for sustainability and environmental quality, please see our 2023 Responsibility & Sustainability Report under "ESG" on the "For Investors" section of our website. Information on our website is not incorporated in this Annual Report on Form 10-K.
For additional information on the Company's efforts for sustainability and environmental quality, please see our 2024 Responsibility & Sustainability Report under "ESG" on the "For Investors" section of our website. Information on our website is not incorporated in this Annual Report on Form 10-K.
For additional information on the Company's human capital management, please see our 2023 Responsibility & Sustainability Report under "ESG" on the "For Investors" section of our website. Information on our website is not incorporated in this Annual Report on Form 10-K.
For additional information on the Company's human capital management, please see our 2024 Responsibility & Sustainability Report under "ESG" on the "For Investors" section of our website. Information on our website is not incorporated in this Annual Report on Form 10-K.
Factors that may favorably impact production levels further 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 "stick-built" housing, and any improvement in conditions in the asset-backed securities markets for manufactured housing loans.
Factors that may favorably impact demand further 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 "stick-built" housing, and any improvement in conditions in the asset-backed securities markets for manufactured housing loans.
Typically, there is a two to four-week period between Patrick receiving a purchase order and the delivery of products to its warehouses or customers and, as a result, the Company has no material backlog of orders. However, this can fluctuate depending on overall market factors and each specific end market we serve.
Typically, there is a two to four-week period between Patrick receiving a purchase order and the delivery of products to its warehouses or customers and, as a result, the Company has no material backlog of orders. However, this timing can fluctuate depending on overall market factors and end market we serve.
The Company generally maintains supplies of various commodity products in its warehouses to ensure that it has product on hand at all times for its distribution customers. The Company purchases a majority of its distribution segment products in railcar, container, or truckload quantities , which are warehoused prior to their sale t o customers.
The Company generally maintains supplies of various commodity products in its warehouses to ensure that it has product on hand for its distribution customers. The Company purchases a majority of its distribution segment products in railcar, container, or truckload quantities , which are warehoused prior to their sale t o customers.
In periods of declining market conditions, customer order rates can decline, resulting in less efficient logistics planning and fulfillment and thus increasing delivery costs due to increased numbers of shipments with fewer products in each shipment. 9 Raw Materials Patrick has arrangements with certain suppliers that specify exclusivity in certain geographic areas, pricing structures and rebate agreements among other terms.
In periods of declining market conditions, customer order rates can decline, resulting in less efficient logistics planning and fulfillment and thus increasing delivery costs due to increased numbers of shipments with fewer products in each shipment. Raw Materials Patrick has arrangements with certain suppliers that provide for exclusivity in certain geographic areas, pricing structures and rebate agreements among other terms.
We expect to continue to feel the effects of our revenue mix through the first half of 2024. Despite short-term challenges, we remain optimistic about the long-term outlook including within the high value, premium segment of the marine industry that we serve. According to the National Marine Manufacturers Association (“NMMA”), per its 2022 U.S.
We expect to continue to feel the effects of our revenue mix through the first half of 2025. Despite short-term challenges, we remain optimistic about the long-term outlook including within the high value, premium segment of the marine industry that we serve. According to the National Marine Manufacturers Association (“NMMA”), per its 2023 U.S.
The Company’s sales to the various businesses of Forest River and Thor, on a combined basis, accounted for 29%, 38% and 42% of our consolidated net sales, for the years ended December 31, 2023, 2022 and 2021 , respectively.
The Company’s sales to the various businesses of Forest River and Thor, on a combined basis, accounted for 29%, 29% and 38% of our consolidated net sales, for the years ended December 31, 2024, 2023 and 2022 , respectively.
The Company may explore strategic acquisition opportunities that are not directly tied to the four primary markets it serves in order to further leverage its core competencies in manufacturing and distribution, diversify its end market exposure and presence, and expand its footprint outside of its core Midwest markets.
The Company may explore strategic acquisition opportunities that are not directly linked to the five primary markets it serves in order to further leverage its core competencies in manufacturing and distribution, diversify its end market exposure and presence, and expand its footprint outside of its core Midwest markets.
Generalized System of Preferences ("GSP") program. Additionally, we are subject to government regulations relating to importation activities, including related to U.S. Customs and Border Protection ("CBP") withhold release orders. The Company also produces and provides products for manufactured homes that must comply with performance and construction regulations promulgated by the U.S. Department of Housing and Urban Development.
Additionally, we are subject to government regulations relating to importation activities, including related to U.S. Customs and Border Protection ("CBP") withhold release orders. The Company also produces and provides products for manufactured homes that must comply with performance and construction regulations promulgated by the U.S. Department of Housing and Urban Development.
Patrick believes that returning capital to shareholders is an important part of its capital allocation strategy, and during 2023 we returned $61 million to shareholders through our regular quarterly dividend and opportunistic share repurchases. The Company was incorporated in 1959 in Indiana.
Patrick believes that returning capital to shareholders is an important part of its capital allocation strategy, and during 2024 we returned $55 million to shareholders through our regular quarterly dividend and opportunistic share repurchases. The Company was incorporated in 1959 in Indiana.
We believe that MH units offer a cost-effective housing solution in a time when high home prices coupled with increased mortgage interest rates have negatively impacted housing affordability. Additional information about the Company’s sales to the MH industry is included in the MD&A of this Form 10-K.
We believe that MH units offer a cost-effective housing solution in a time when high home prices coupled with elevated mortgage interest rates have negatively impacted housing affordability. Detailed narrative information about the Company’s sales to the MH industry is included in the MD&A of this Form 10-K.
("Winnebago") which combined held approximately 86% of retail market share for towables an d 83% for motorized units for 2023 as reported per Statistical Surveys, Inc. ("SSI"). We believe there has been substantial growth over the past several years in the consumer’s affinity for the Outdoor Enthusiast lifestyle.
("Winnebago") which combined held approximately 86% of retail market share for towables and 83% for motorized units for 2024 as reported per Statistical Surveys, Inc. ("SSI"). We believe there has been substantial growth over the past several years in the consumer’s affinity for the Outdoor Enthusiast lifestyle.
Prior to joining Patrick in February 2022, Ms. Amundson served in a temporary capacity with Kerry Foods with a focus on providing human resources leadership in the transformation of its North America operations model. Prior to this role, Ms.
Amundson served in a temporary capacity with Kerry Foods with a focus on providing human resources leadership in the transformation of its North America operations model. Prior to this role, Ms.
Ellis served as Vice President of Aftermarket Sales for the Dometic Group from 2015 to 2016. Prior to his tenure at Dometic, Mr. Ellis served as Vice President of Global Sales and Marketing from 2007 to 2015 at Atwood Mobile Products. Mr. Ellis has over 27 years of experience serving the recreational vehicle, marine, manufactured housing, industrial and automotive markets.
Ellis served as Vice President of Aftermarket Sales for the Dometic Group from 2015 to 2016. Prior to his tenure at Dometic, Mr. Ellis served as Vice President of Global Sales and Marketing from 2007 to 2015 at Atwood Mobile Products. Mr. Ellis has over 28 years of experience serving the RV, marine, manufactured housing, powersports, industrial and automotive markets.
Industrial Markets We estimate that approximately 70% to 80% of our industrial net sales in 2023 were associated with the U.S. residential housing market. We believe that there is a direct correlation between the demand for our products and new residential housing construction and existing home remodeling activities.
Industrial Markets We estimate that approximately 75% to 85% of our industrial net sales in 2024 were associated with the U.S. residential housing market. We believe that there is a direct correlation between the demand for our products and new residential housing construction and existing home remodeling activities.
Over the last three years, we have executed on a number of new product initiatives and completed acquisitions for approximately $804 million in total consideration that directly complement our core competencies and existing products, expand our presence in our primary end markets, and position us to enter new end markets.
Over the last three years, we have executed on a number of new product initiatives and completed acquisitions for approximately $696 million in total consideration that directly complement our core competencies and existing products, expand our presence in our primary end markets, and position us to opportunistically enter into adjacent end markets or product categories.
As of December 31, 2023, our team members totaled approximately 10,000, of which 83% are hourly team members who serve our customers by producing and distributing products in our RV, marine, MH and industrial end markets, and 17% who are salaried employees who manage the resources, capital allocations, business decisions, and customer relationships of our end markets.
As of December 31, 2024, our team members totaled approximately 10,000, of which 80% are hourly team members who serve our customers by producing and distributing products in our RV, powersports, marine, MH and industrial end markets, and 20% who are salaried employees who manage the resources, capital allocations, business decisions, and customer relationships of our end markets.
Rodino was appointed President of the Company in July 2021 and was Chief Sales Officer of the Company from September 2016 to July 2021. Mr. Rodino served as the Executive Vice President of Sales from December 2011 to July 2021.
Rodino was Chief Sales Officer of the Company from September 2016 to July 2021. Mr. Rodino served as the Executive Vice President of Sales from December 2011 to July 2021 and as the Chief Operating Officer of the Company from March 2013 to September 2016.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” (the "MD&A") of this Form 10-K. 6 Marine We believe that the marine market reflects the active, outdoor leisure-based, family-oriented lifestyle, similar to our RV end market, and the Company has increased its focus and expanded its presence in this market through recent acquisitions, particularly within the last three years.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” (the "MD&A") of this Form 10-K. Marine We believe that the marine market reflects the active, outdoor enthusiast-based, family-oriented lifestyle, similar to our RV and powersports end markets, and the Company has increased its focus and expanded its presence in this market through recent acquisitions.
Approximat ely 9%, 9%, and 8% of the Company's distribution segment’s sales were from products shipped directly from the suppliers to Patrick customers in 2023, 2022, and 2021, respectively.
Approximat ely 9% of the Company's distribution segment’s sales were from products shipped directly from the suppliers to Patrick customers in each of 2024, 2023 and 2022.
The Company operates through a nationwide network that includes, as of December 31, 2023, 179 manufacturing plants and 62 warehouse and distribution facilities located in 23 states, with a small presence in Mexico, China and Canada.
The Company operates through a nationwide network that includes, as of December 31, 2024, approximately 179 manufacturing plants and 47 warehouse and distribution facilities located in 25 states, with a small presence in Mexico, China and Canada.
In addition, per SSI, marine powerboat retail unit shipments decreased approximately 5% in 2023 compared to 2022, while marine wholesale unit shipments, according to Company estimates based on NMMA data, increased approximatel y 2% in 2023 compared to 2022. Additional information about the Company’s sales to the marine industry is included in the MD&A of this Form 10-K.
In addition, per SSI, marine powerboat retail unit shipments decreased approximately 8% in 2024 compared to 2023, while marine wholesale unit shipments, according to Company estimates based on NMMA data, decreased approximatel y 25% in 2024 compared to 2023. Detailed narrative information about the Company’s sales to the marine industry is included in the MD&A of this Form 10-K.
Our leadership development programs bring a diverse and energetic source of talent to lead the future of our organization, and our recruitment efforts strive to foster an inclusive culture that we believe strengthens our organization and our ability to serve our customers. 11 The organization is built on our six core foundational values of being BETTER Together: • B alance - We work to build a healthy work environment that encourages excellence, happiness, and peace in both our work and our home life. • E xcellence - We strive to meet the highest possible standards of achievement in our work and our relationships. • T rust - We do what we say we will do every time - and communicate with all stakeholders if a commitment evolves. • T eamwork - We challenge, encourage, equip, empower, and inspire the individuals we work with. • E mpowerment - We give our team the information, tools, and trust they need to grow as leaders and achieve results. • R espect - We treat our teammates and partners with the utmost honor and dignity.
The organization is built on our six core foundational values of being BETTER Together: • B alance - We work to build a healthy work environment that encourages excellence, happiness, and peace in both our work and our home life. • E xcellence - We strive to meet the highest possible standards of achievement in our work and our relationships. • T rust - We do what we say we will do every time - and communicate with all stakeholders if a commitment evolves. • T eamwork - We challenge, encourage, equip, empower, and inspire the individuals we work with. • E mpowerment - We give our team the information, tools, and trust they need to grow as leaders and achieve results. • R espect - We treat our teammates and partners with the utmost honor and dignity.
In addition, the Company competes with manufacturers of manufactured homes with vertically integrated operations. Across the Company’s range of products and services, competition exists primarily on price, product features and innovation, timely and reliable delivery, quality and customer service. Several competitors compete with Patrick in each product line on a regional and local basis.
Across the Company’s range of products and services, competition exists primarily on price, product features and innovation, timely and reliable delivery, quality and customer service. Several competitors compete with Patrick in each product line on a regional and local basis.
Based on current available data per SSI through December 2023, within the powerboat sector for 2023, fiberglass units a ccounted for approximately 35% of retail unit sales, aluminum 25%, pontoon 34% and ski & wake 6%.
Based on current available data per SSI through December 2024, within the powerboat sector for 2024, fiberglass units a ccounted for approximately 34% of retail unit sales, aluminum 29%, pontoon 32% and ski & wake 5%.
The Company's marine revenue mix is slightly more concentrated toward higher dollar units, particularly the fiberglass and ski and wake segments, which began to see more pronounced softness in market demand in the second half of 2023 compared to the broader marine market.
The Company's marine revenue mix is slightly more concentrated toward higher dollar units, particularly the pontoon and ski and wake segments, which have seen more pronounced softness in market demand beginning in the second half of 2023 and throughout 2024 compared to the broader marine market.
The Company operates within two reportable segments, Manufacturing and Distribution, through a nationwide network of manufacturing and distribution centers for its products, thereby reducing in-transit delivery time and cost to the regional manufacturing footprint of its customers. The Manufacturing and Distribution segments accounted for 75% and 25%, respectively, of the Company’s consolidated net sales for 2023.
The Company operates within two reportable segments, Manufacturing and Distribution, through a nationwide network of manufacturing and distribution centers for its products, thereby reducing in-transit delivery time and cost to the regional manufacturing footprint of its customers.
Recreational Boating Statistical Abstract (the "Abstract"), U.S. retail expenditures on boats, engines, accessories, and related costs totaled approximately $59.3 billion in 2022, up approximately 4.4% from 2021. Based on data from the Abstract, we estimate that the average age of pre-owned powerboats sold during 2022 was approximately 23 years compared to an average useful life of 30 years.
Recreational Boating Statistical Abstract (the "Abstract"), total U.S. retail expenditures on boats, engines, accessories, and related costs fell 2.6% to $57.7 billion in 2023 compared to 2022. Based on data from the Abstract, we estimate that the average age of pre-owned powerboats sold during 2023 was approximately 23 years compared to an average useful life of 30 years.
The Company’s net sales by market are as follows: 2023 2022 RV 43 % 53 % Marine 27 % 21 % MH 16 % 15 % Industrial 14 % 11 % Total 100 % 100 % Recreational Vehicles 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 Company’s net sales by end market are as follows: 2024 2023 RV 44 % 43 % Marine 15 % 23 % Powersports 10 % 4 % MH 18 % 16 % Industrial 13 % 14 % Total 100 % 100 % Recreational Vehicles 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.
During 2023 , the Company completed acquisitions for approximately $30 million of total consideration and over the last three years has completed acquisitions for approximately $804 million of total consideration.
During 2024 , the Company completed acquisitions for approximately $418 million of total consideration and over the last three years has completed acquisitions for approximately $696 million of total consideration.
Ellis was appointed Executive Vice President of Operations and Chief Operating Officer of the Company in September 2016. He was elected an officer in September 2016. Mr. Ellis joined the Company as Vice President of Market Development in April 2016. Prior to his role at Patrick, Mr.
Ellis was named President – Powersports, Technology and Housing in January 2024 after serving as Executive Vice President of Operations and Chief Operating Officer of the Company since September 2016. Mr. Ellis joined the Company as Vice President of Market Development in April 2016 and was elected an executive officer in September 2016. Prior to his role at Patrick, Mr.
Prior to that, he was the Chief Operating Officer of the Company from March 2013 to September 2016, and Vice President of Sales for the Midwest from August 2009 to December 2011. Mr. Rodino has over 30 years of experience in serving the recreational vehicle, manufactured housing, marine and industrial markets. Kip B.
Prior to that, he was Vice President of Sales for the Midwest from August 2009 to December 2011. Mr. Rodino has over 31 years of experience in serving the RV, marine, manufactured housing and industrial markets. Kip B.
In 2023, according to the Recreation Vehicle Industry Association ("RVIA"), towable and motorized unit shipments represented approximately 85% and 15%, respectively, of total RV industry wholesale shipments with wholesale unit shipments decreasing 39% in the towable sector and decreasing 21% in the motorized sector in 2023 compared to the prior year.
In 2024, according to the Recreation Vehicle Industry Association ("RVIA"), towable and motorized unit shipments represented approximately 90% and 10%, respectively, of total RV industry wholesale shipments with wholesale unit shipments increasing 12% in the towable sector and decreasing 24% in the motorized sector in 2024 compared to the prior year.
Management regularly monitors capacity at its facilities and reallocates existing resources where needed to maintain production efficiencies throughout all of its operations and capitalize on commercial and industrial synergies in key regions to support profitable growth, grow its customer base, and expand its geographical product reach outside its core Midwest market. 8 Branding New product development is a key component of the Company’s efforts to grow its market share and revenue base, adapt to changing market conditions, and proactively address customer demand.
Management regularly monitors capacity at its facilities and reallocates existing resources where needed to maintain production efficiencies throughout all of its operations and capitalize on commercial and industrial synergies in key regions to support profitable growth, grow its customer base, and expand its geographical product reach outside its core Midwest market.
As a corporate lawyer, Mr. Duthie focused on mergers and acquisitions, supply chain management and commercial contract counseling. Mr. Duthie served as an assistant general counsel for a privately-held manufacturer of flow control products from 2002 to 2006. 12 Stacey Amundson was appointed Executive Vice President, Human Resources and Chief Human Resources Officer in May 2022.
Duthie served as an assistant general counsel for a privately-held manufacturer of flow control products from 2002 to 2006. Stacey L. Amundson was appointed Executive Vice President and Chief Human Resources Officer in May 2022. Prior to joining Patrick in February 2022, Ms.
Financial information about these operating segments is included in Note 16 "Segment Information" of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K (the "Form 10-K") and incorporated herein by reference.
The Manufacturing and Distribution segments accounted for 74% and 26%, respectively, of the Company’s consolidated net sales for the year ended December, 31, 2024. Financial information about these operating segments is included in Note 17 "Segment Information" of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K (the "Form 10-K") and incorporated herein by reference.
Our operating facilities generally are strategically located in proximity to the customers they serve.
Our operating facilities generally are strategically located in proximity to the customers they serve. Previously, our sales to the powersports end market were included in the Company’s marine end market sales.
While this percentage was down from 37% in 2021, these higher-income households still represented a significantly greater proportion of campers than before the COVID-19 pandemic. Detailed narrative information about the Company’s sales to the RV industry is included in Item 7.
While this percentage was down from 28% in 2022, these higher-income households still represented a significantly greater proportion of campers than before the COVID-19 pandemic.
As more people see the benefits of enjoying the outdoors with families and friends, there should be a positive impact on long-term demand in the RV market.
As more people see the benefits of enjoying the outdoors with families and friends, there should be a positive impact on long-term demand in the RV market. We also are optimistic about the near-term outlook for the RV market, which we believe bottomed in 2023 after a period of sharp declines in OEM production.
Capital expenditures for 2023 consisted of $59 million of investments primarily to provide more advanced manufacturing automation, replace and upgrade production equipment.
Purchases of property, plant, and equipment for 2024 consisted of $76 million of investments which were primarily used to provide more advanced manufacturing automation and replace and upgrade production equipment.
While these supply chain constraints improved during the second half of 2022, OEM production declined slightly in 2023 as concerns relating to elevated interest rates, inflation and overall economic uncertainties dampened retail demand and led marine dealers to reduce inventory levels.
After a slight decrease in 2023, OEM production declined further in 2024 as concerns relating to elevated interest rates, inflation and overall economic uncertainties dampened retail demand and led marine dealers to reduce inventory levels.
The Company strives to be the supplier of choice for its customers by elevating the customer purchasing experience with expert product line managers, and support staff and strategic partnerships for each operating brand, which help drive efficiency and maximize value for its customers.
The Company strives to be the supplier of choice for its customers by elevating the customer purchasing experience with expert product line managers, and support staff and strategic partnerships for each operating brand, which help drive efficiency and maximize value for its customers. 9 Table of Contents The Company’s research and development efforts are intended to maintain leadership positions in core products and provide the Company with a competitive edge as it seeks additional business with new and existing customers.
See Note 3 "Acquisitions" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for further discussion of acquisitions completed by the Company in 2023, 2022 and 2021.
See Note 3 "Acquisitions" of 8 Table of Contents the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for further discussion of acquisitions completed by the Company in 2024, 2023 and 2022. Competition The RV, marine, powersports, MH and industrial markets are highly competitive, both among manufacturers and the suppliers of various components.
Competition The RV, marine, MH and industrial markets are highly competitive, both among manufacturers and the suppliers of various components. The barriers to entry for each industry are generally low and include compliance with industry standards, codes and safety requirements, and the initial capital investment required to establish manufacturing operations.
The barriers to entry for each industry are generally low and include compliance with industry standards, codes and safety requirements, and the initial capital investment required to establish manufacturing operations. In addition, the Company competes with manufacturers of manufactured homes with vertically integrated operations.
Both Forest River and Thor have multiple businesses and brands that operate independently under the parent company and these multiple businesses and brands generally purchase our products independently from one another.
Its revenues from the RV market include sales to two major manufacturers of RVs that each account for over 10% of the Company's net sales, Forest River and Thor. Both Forest River and Thor have multiple businesses and brands that operate independently under the parent company and these multiple businesses and brands generally purchase our products independently from one another.
Matthew S. Filer was appointed Interim Executive Vice President-Finance, Chief Financial Officer, and Treasurer in May 2023. He joined Patrick as Senior Vice President of Finance in November 2022.
Filer joined the Company as Senior Vice President of Finance in November 2022 and was elected Chief Accounting Officer in May 2024. Mr. Filer served as Interim Executive Vice President - Finance, Chief Financial Officer and Treasurer from May 2023 to March 2024. Prior to his role at Patrick, Mr.
Additionally, we believe that other residential and commercial segments have been less vulnerable to import competition, and therefore, provide opportunities for increased sales penetration and market share gains. After a relatively flat first half of 2023, multifamily housing starts experienced significant softness in the second half of 2023.
Additionally, we believe that other residential and commercial segments have been less vulnerable to import competition, and therefore, provide opportunities for increased sales penetration and market share gains. In 2024, new housing starts were down from 2023 by approximately 4%, with single family housing starts increasing approximately 6% and multifamily housing starts decreasing 25%.
Joel D. Duthie was appointed as Executive Vice President, Chief Legal Officer and Secretary in May 2021. Mr. Duthie joined the Company as General Counsel in November 2020. Prior to joining Patrick, Mr. Duthie was a partner with Barnes & Thornburg LLP, and practiced law at the firm from 2000 to 2002 and 2007 to 2020.
Filer has extensive industry knowledge across multiple manufacturing industries such as rail, mining, industrial and defense. Joel D. Duthie joined the Company as General Counsel in November 2020 and was appointed Executive Vice President, Chief Legal Officer and Secretary in May 2021. Prior to joining Patrick, Mr.
In 2007, he joined Caterpillar Inc. and served in a series of progressive leadership roles which culminated in his appointment to Chief Financial Officer beginning in 2019 for two separate multi-billion dollar divisions within Caterpillar’s Resource Industries segment. Prior to that, Mr. Filer served in various controllership and CFO roles for Progress Rail, Caterpillar's rail division, from 2008 to 2019.
Filer was with Caterpillar Inc. from 2007 to 2021, serving in a series of progressive global leadership roles which culminated in his appointment as Chief Financial Officer for divisions within Caterpillar’s Resource Industries segment. With over 27 years of experience with prior organizations that include Honeywell and Raytheon, Mr.
Demographic and ownership trends continue to point to favorable market growth for the long term in the RV market, as we believe that there has been a shift toward outdoor, nature-based tourism activities in a post-COVID environment, with younger and more diverse campers across different socio-economic groups. According to the 2023 Kampgrounds of America, Inc.
Demographic and ownership trends continue to point to favorable market growth for the long term in the RV market, as we believe that the shift toward outdoor, nature-based tourism activities has continued, despite the loss of many first time campers who had contributed to a significant increase in camping participation during the COVID-19 pandemic.
Executive Officers of the Company The following table sets forth our executive officers as of January 1, 2024: Officer Position Age Andy L. Nemeth Chief Executive Officer 54 Jeffrey M. Rodino President 53 Kip B. Ellis Executive Vice President-Operations and Chief Operating Officer 49 Matthew S. Filer Interim Executive Vice President-Finance, Chief Financial Officer, and Treasurer 51 Joel D.
Executive Officers of the Company The following table sets forth our executive officers as of January 1, 2025: Officer Position Age Andy L. Nemeth Chairman and Chief Executive Officer 55 Jeffrey M. Rodino President - RV 54 Kip B. Ellis President - Powersports, Technology & Housing 50 Richard N. Reyenger President – Marine 76 Andrew C.
Nemeth previously served as President of the Company from January 2016 to July 2021, Executive Vice President of Finance and Chief Financial Officer from May 2004 to December 2015, and Secretary-Treasurer from 2002 to 2015. Mr. Nemeth has over 32 years of manufactured housing, recreational vehicle, marine and industrial experience in various financial and managerial capacities. Jeffrey M.
Nemeth has over 33 years of RV, marine, powersports, manufactured housing and industrial experience in various financial and managerial capacities. Director since 2006. Jeffrey M. Rodino was named President – RV in January 2024 after serving as President of the Company from July 2021 to January 2024. Prior to serving as Patrick’s President, Mr.
Manufactured Housing 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. In the aggregate, the top three manufacturers produced approximately 80% of MH market retail unit shipments in 2023 per SSI.
Detailed narrative information about the Company’s sales to the powersports industry is included in the MD&A of this Form 10-K. 7 Table of Contents Manufactured Housing 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.
Upholstered products and mattresses provided by the Company for RVs must comply with Federal Motor Vehicle Safety Standards regulated by the National Highway Traffic Safety Administration regarding flammability. Select raw materials are subject to tariffs and other import duties. For example, we have historically received benefits from duty-free imports on certain products from certain countries pursuant to the U.S.
Upholstered products and mattresses provided by the Company for RVs must 10 Table of Contents comply with Federal Motor Vehicle Safety Standards regulated by the National Highway Traffic Safety Administration regarding flammability.
("KOA") North American Camping and Outdoor Hospitality Report, based on surveys of North American leisure travelers, 58.5 million households went camping in 2022, an increase from 57 million in 2021 and 42 million in 2019.
("KOA") North American Camping and Outdoor Hospitality Report, utilizing surveys of North American leisure travelers, camping remains popular, with annual camping households of 54 million in 2023 which, while a decrease from 58 million in 2022, is well above pre-pandemic levels of 39 million in 2018 and 42 million in 2019.
Amundson has led the human resource function with specialties in talent management, executive compensation, mergers and acquisitions, integrations, shared services, and large-scale organizational transformations.
Amundson has led the human resource function with specialties in talent management, executive compensation, M&A, integrations, shared services, and large-scale organizational transformations. Charles R. Roeder was appointed Executive Vice President - Sales in January 2024 and elected Chief Sales Officer in May 2024. Prior to that, Mr. Roeder served as Senior Vice President of RV Operations since 2020. Mr.
Consumer demand in the marine market is generally driven by the popularity of the recreational and leisure lifestyle and by economic conditions.
Consumer demand in the marine market is generally driven by the popularity of the recreational and leisure lifestyle and by economic conditions. The powerboat sector, which is our primary marine market, has experienced a down cycle since mid-2023, resulting in continued softness particularly in our higher-engineered ski/wake and pontoon categories, where we maintain a significant market presence.
The Company’s research and development efforts are intended to maintain leadership positions in core products and provide the Company with a competitive edge as it seeks additional business with new and existing customers. The Company also works with technology development partners, including customers, to develop technological capabilities and new products and applications.
The Company also works with technology development partners, including customers, to develop technological capabilities and new products and applications. Marketing and Distribution As of December 31, 2024, the Company had approximately 4,500 active customers.
The potential for interest rate cuts in 2024, combined with low inventory and high prices for existing homes for sale, may provide support for our industrial market in 2024, particularly if economic uncertainties recede. Additional information about the Company’s sales to the industrial markets is included in the MD&A of this Form 10-K.
Detailed narrative information about the Company’s sales to the industrial markets is included in the MD&A of this Form 10-K.
Duthie Executive Vice President-Chief Legal Officer and Secretary 49 Stacey Amundson Executive Vice President-Human Resources and Chief Human Resources Officer 57 Andy L. Nemeth was appointed Chief Executive Officer of the Company in January 2020. Mr.
Nemeth, who was appointed as Chairman of the Board in May 2024, has been the Chief Executive Officer of the Company since January 2020 and served as President of the Company from January 2016 to July 2021. Mr.
At the same time, the proportion of campers in younger demographic groups has been steadily increasing over the last several years, with "millennials" and "Gen Zers" representing 71% of campers in 2022, up from 53% in 2021 and 44% in 2019. Additionally, according to the 2023 KOA report, 28% of 2022 camper households reported household income of over $100,000.
Younger campers (Millennials and GenZers) still represent an important camper demographic group despite a decrease in participation rates since the peak of the pandemic, with 48% of annual campers and 49% of new campers from these groups. Additionally, according to the 2024 KOA report, 25% of 2023 camper households reported 6 Table of Contents household income of over $100,000.
Removed
We also are optimistic about the near-term outlook for the RV market, which we believe bottomed in 2023 after a period of sharp declines in OEM production in late 2022 and 2023 as a result of decreased retail demand and dealer inventory reductions.
Added
The Company's principal executive and administrative offices are located at 107 West Franklin Street, Elkhart, Indiana 46516 and the telephone number is (574) 294-7511; Internet website address: www.patrickind.com .
Removed
Of these camping households, 15.2 million went on at least one RV trip during 2022, compared to 14.8 million in 2021 and 11.3 million in 2019.
Added
Effective with the first quarter of 2024, powersports net sales are being reported separately after the January 2024 acquisition of Sportech, LLC (“Sportech”), as disclosed in Note 2 "Revenue Recognition" of the Notes to Consolidated Financial Statements.
Removed
The sharp increase in demand for powerboats, which is our primary marine market, experienced during the COVID-19 pandemic continued through 2021 and into 2022, although supply chain constraints limited wholesale unit shipments which resulted in higher order backlogs and historically low dealer inventory levels, during the first half of 2022.
Added
Following a dealer inventory restocking in the first half of 2024, OEMs reduced production slightly in the second half of 2024 as retail demand decreased, with dealers managing inventory levels and the OEMs demonstrating operating discipline to maintain a balanced inventory channel for the long-term health and stability of the industry.
Removed
Wholesale unit shipments have increased in the MH industry from a low of approximately 49,800 units in 2009 to approximately 89,200 units in 2023 after reaching a 15-year high of 112,900 units in 2022.
Added
Based on data from the 2024 Kampgrounds of America, Inc.
Removed
Single-family housing starts began to recover in the second half of 2023 after declining significantly earlier in the year. Housing prices were resilient last year in the face of a continued elevated mortgage rates.
Added
Following a similar pattern as overall camping participation, 13.2 million households reported taking at least one RV trip in 2023, which was lower than in 2022 but well above pre-pandemic levels of 9.4 million in 2018 and 11.3 million in 2019. Detailed narrative information about the Company’s sales to the RV industry is included in Item 7.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDue to conditions within these insurance markets and other factors beyond our control, future coverage limits, terms and conditions and the amount of the related premiums could have a negative impact on our operating results. While we continually measure the risk/reward of policy limits and coverage, the lack of coverage in certain circumstances could result in potential uninsured losses.
Biggest changeWe generally negotiate our insurance contracts annually for property, casualty, workers compensation, general liability, health insurance, and directors and officers liability coverage. Due to conditions within these insurance markets and other factors beyond our control, future coverage limits, terms and conditions and the amount of the related premiums could have a negative impact on our operating results.
The RV, marine, MH and industrial markets in which we operate are subject to cycles of growth and contraction in consumer demand, and volatility in production levels, shipments, sales and operating results, due to external factors such as general economic conditions, consumer confidence, employment rates, financing availability, interest rates, inflation, fuel prices, and other economic conditions affecting consumer demand and discretionary spending.
The RV, marine, powersports, MH and industrial markets in which we operate are subject to cycles of growth and contraction in consumer demand, and volatility in production levels, shipments, sales and operating results, due to external factors such as general economic conditions, consumer confidence, employment rates, financing availability, interest rates, inflation, fuel prices, and other economic conditions affecting consumer demand and discretionary spending.
In addition, certain provisions of the Dodd-Frank Act, which regulate financial transactions, could make certain types of loans more difficult to obtain, including those historically used to finance the purchase of manufactured homes. The RV, marine, MH and industrial industries are highly competitive and some of our competitors may have greater resources than we do.
In addition, certain provisions of the Dodd-Frank Act, which regulate financial transactions, could make certain types of loans more difficult to obtain, including those historically used to finance the purchase of manufactured homes. The RV, marine, powersports, MH and industrial industries are highly competitive and some of our competitors may have greater resources than we do.
Our operating results would also be adversely affected if, anticipating greater demand than actually develops, we commit to the purchase of more materials than we need, which is more likely to occur in a period of demand 15 uncertainties such as we are currently experiencing. There can be no assurance that we will not encounter these problems in the future.
Our operating results would also be adversely affected if, anticipating greater demand than actually develops, we commit to the purchase of more materials than we need, which is more likely to occur in a period of demand uncertainties such as we are currently experiencing. There can be no assurance that we will not encounter these problems in the future.
In addition, fluctuation in demand could adversely affect our management of inventory, which could lead to an inability to meet customer needs or a charge for obsolete inventory. Manufacturing operations in the RV, marine and MH industries historically have been seasonal and at their highest levels when the weather is moderate.
In addition, fluctuation in demand could adversely affect our management of inventory, which could lead to an inability to meet customer needs or a charge for obsolete inventory. Manufacturing operations in the RV, powersports, marine and MH industries historically have been seasonal and at their highest levels when the weather is moderate.
If we are unable to compete successfully against other manufacturers and suppliers to the RV, marine and MH industries as well as to the industrial markets we serve, we could lose customers and sales could decline, or we may not be able to improve or maintain profit margins on sales to customers or be able to continue to compete successfully in our core markets.
If we are unable to compete successfully against other manufacturers and suppliers to the RV, marine, powersports and MH industries as well as to the industrial markets we serve, we could lose customers and sales could decline, or we may not be able to improve or maintain profit margins on sales to customers or be able to continue to compete successfully in our core markets.
Restrictions on the availability of consumer and wholesale financing for RVs, marine products, and manufactured homes and increases in the costs of such financing have in the past limited, and could again limit, the ability of consumers and wholesale customers to purchase such products, which would result in reduced production by our customers, and therefore reduce demand for our products.
Restrictions on the availability of consumer and wholesale financing for RVs, marine products, powersports products, and manufactured homes and increases in the costs of such financing have in the past limited, and could again limit, the ability of consumers and wholesale customers to purchase such products, which would result in reduced production by our customers, and therefore reduce demand for our products.
If a material economic recession occurred, such as the recession that impacted the economy in 2007-2010, production of RVs, marine units and manufactured homes could decline materially, resulting in reduced demand for our products. A decline in our operating results could negatively impact our liquidity.
If a material economic recession occurred, such as the recession that impacted the economy in 2007-2010, production of RVs, powersports, marine units and manufactured homes could decline materially, resulting in reduced demand for our products. A decline in our operating results could negatively impact our liquidity.
If we cannot effectively manage the challenges and risks associated with doing business internationally, our revenues and profitability may suffer. We purchase a material portion of our raw materials and other supplies from suppliers located in Indonesia, China, Malaysia and Canada.
If we cannot effectively manage the challenges and risks associated with doing business internationally, our revenues and profitability may suffer. We purchase a material portion of our raw materials and other supplies from suppliers located in Indonesia, China, Malaysia, Mexico and Canada.
In addition to the effects upon our operations, a health emergency could have, but is not limited to, the following impact: • Decreases in consumer confidence and disposable income and increases in unemployment could reduce demand for our products by our customers in all of our end markets. • Tightening credit standards could negatively impact credit availability to consumers which could have an adverse effect on all of our end markets. • Supply chain and shipping interruptions and constraints, volatility in demand for our products caused by sudden and material changes in production levels by our customers or other restrictions affecting our business could adversely impact our planning and forecasting, our revenues and our operations. • Disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing and supply elements such as raw materials or other finished product components, transportation, workforce, or other manufacturing and distribution capabilities could result in shortages of materials, inflationary pressures, and our inability to meet our end market customer needs and achieve cost targets. • Material changes in the conditions in markets in which we manufacture, sell or distribute our products, including governmental or regulatory actions in response to such an event, could adversely impact operations necessary for the production, distribution, sale, and support of our products. • Failure of third parties on which we rely, including our customers, suppliers, distributors, commercial banks, and other external business partners, to meet their obligations to the Company or to timely meet those obligations, or material disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, may adversely impact our operations. 19 • Certain of our customers may experience financial difficulties, including bankruptcy or insolvency, as a result of such an event.
In addition to the effects upon our operations, a health emergency could have, but is not limited to, the following impact: • Decreases in consumer confidence and disposable income and increases in unemployment could reduce demand for our products by our customers in all of our end markets. • Tightening credit standards could negatively impact credit availability to consumers which could have an adverse effect on all of our end markets. • Supply chain and shipping interruptions and constraints, volatility in demand for our products caused by sudden and material changes in production levels by our customers or other restrictions affecting our business could adversely impact our planning and forecasting, our revenues and our operations. • Disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing and supply elements such as raw materials or other finished product components, transportation, workforce, or other manufacturing and distribution capabilities could result in shortages of materials, inflationary pressures, and our inability to meet our end market customer needs and achieve cost targets. • Material changes in the conditions in markets in which we manufacture, sell or distribute our products, including governmental or regulatory actions in response to such an event, could adversely impact operations necessary for the production, distribution, sale, and support of our products. • Failure of third parties on which we rely, including our customers, suppliers, distributors, commercial banks, and other external business partners, to meet their obligations to the Company or to timely meet those obligations, or material disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, may adversely impact our operations. 20 Table of Contents • Certain of our customers may experience financial difficulties, including bankruptcy or insolvency, as a result of such an event.
In addition, recent seasonal industry trends have been, and future trends may be, different than in prior years due to the impact of COVID-19, volatile economic conditions, interest rates, access to financing, cost of fuel, national and regional economic conditions and consumer confidence on retail sales of RVs and marine units and other products for which the Company sells its components, as well as fluctuations in RV and marine dealer inventories, increased volatility in demand from RV and marine dealers, the timing of dealer orders, and from time to time, the impact of severe weather conditions on the timing of industry-wide wholesale shipments.
In addition, recent seasonal industry trends have been, and future trends may be, different than in prior years due to volatile economic conditions, interest rates, access to financing, cost of fuel, national and regional economic conditions and consumer confidence on retail sales of RVs and marine units and other products for which the Company sells its components, as well as fluctuations in RV and marine dealer inventories, increased volatility in demand from RV and marine dealers, the timing of dealer orders, and from time to time, the impact of severe weather conditions on the timing of industry-wide wholesale shipments.
Conditions in the credit market could limit the ability of consumers, dealers and wholesale customers to obtain retail, floor plan and wholesale financing for RVs, marine products, and manufactured homes, resulting in reduced demand for our products.
Conditions in the credit market could limit the ability of consumers, dealers and wholesale customers to obtain retail, floor plan and wholesale financing for RVs, marine products, powersports products, and manufactured homes, resulting in reduced demand for our products.
In the event of a default under any of our indebtedness, the holders of the defaulted debt could elect to declare all the funds borrowed to be due and payable, together with accrued and unpaid interest, which in turn could result in cross-defaults under our other indebtedness The lenders under our 2021 Credit Agreement could also elect to terminate their commitments thereunder and cease making further loans, and such lenders could institute foreclosure proceedings against their collateral, and we could be forced into bankruptcy or liquidation.
In the event of a default under any of our indebtedness, the holders of the defaulted debt could elect to declare all the funds borrowed to be due and payable, together with accrued and unpaid interest, which in turn could result in cross-defaults under our other indebtedness The lenders under our 2024 Credit Agreement could also elect to terminate their commitments thereunder and cease making further loans, and such lenders could institute foreclosure proceedings against their collateral, and we could be forced into bankruptcy or liquidation.
Risks Related to Information Security, Cybersecurity and Data Privacy If our information technology systems fail to perform adequately, our operations could be disrupted and could adversely affect our business, reputation and results of operations.
Risks Related to Information Security, Cybersecurity and Data Privacy If our information technology systems fail to perform adequately, our operations could be disrupted which could adversely affect our business, reputation and results of operations.
These restrictions will limit our ability and the ability of our subsidiaries to, among other things: • incur additional indebtedness (including guarantee obligations); • incur liens; • engage in mergers, consolidations and certain other fundamental changes; • dispose of assets; • make advances, investments and loans; • engage in sale and leaseback transactions; • engage in certain transactions with affiliates; • enter into contractual arrangements that encumber or restrict the ability to (A) (i) pay dividends or make distributions, (ii) pay indebtedness, (iii) make loans or advances, or (iv) sell, lease or transfer property, in each case to us, or (B) incur liens; • pay dividends, distributions and other payments in respect of capital stock or subordinated debt, and repurchase or retire capital stock, warrants or options or subordinated debt; and • amend the terms of the documents governing, or make payments prior to the scheduled maturity date of, certain other indebtedness, as applicable. 21 As a result of these restrictions, we will be limited as to how we conduct our business and we may not be able to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities.
These restrictions will limit our ability and the ability of our subsidiaries to, among other things: • incur additional indebtedness (including guarantee obligations); • incur liens; • engage in mergers, consolidations and certain other fundamental changes; • dispose of assets; • make advances, investments and loans; • engage in sale and leaseback transactions; • engage in certain transactions with affiliates; • enter into contractual arrangements that encumber or restrict the ability to (A) (i) pay dividends or make distributions, (ii) pay indebtedness, (iii) make loans or advances, or (iv) sell, lease or transfer property, in each case to us, or (B) incur liens; • pay dividends, distributions and other payments in respect of capital stock or subordinated debt, and repurchase or retire capital stock, warrants or options or subordinated debt; and • amend the terms of the documents governing, or make payments prior to the scheduled maturity date of, certain other indebtedness, as applicable. 22 Table of Contents As a result of these restrictions, we will be limited as to how we conduct our business, and we may not be able to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities.
However, the warrant transactions 22 could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the warrants.
However, the warrant transactions could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the warrants.
The market price of our common stock could fluctuate materially in response to a number of factors, many of which are beyond our control, including the following: • variations in our customers' and our competitors’ operating results; • high concentration of shares held by institutional investors; • announcements by us or our competitors of material contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; • announcements by us or our competitors of technological improvements or new products; • the gain or loss of material customers; • additions or departures of key personnel; • events affecting other companies that the market deems comparable to us; • changes in investor perception of our business and/or management; • changes in global economic conditions or general market conditions in the industries in which we operate; • sales of our common stock held by certain equity investors or members of management; 24 • issuance of our common stock or debt securities by the Company; and • the occurrence of other events that are described in these risk factors.
The market price of our common stock could fluctuate materially in response to a number of factors, many of which are beyond our control, including the following: • variations in our customers' and our competitors’ operating results; • high concentration of shares held by institutional investors; • announcements by us or our competitors of material contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; • announcements by us or our competitors of technological improvements or new products; • the gain or loss of material customers; • additions or departures of key personnel; • events affecting other companies that the market deems comparable to us; • changes in investor perception of our business and/or management; 25 Table of Contents • changes in global economic conditions or general market conditions in the industries in which we operate; • sales of our common stock held by certain equity investors or members of management; • issuance of our common stock or debt securities by the Company; and • the occurrence of other events that are described in these risk factors.
Retail sales of RVs historically have been closely tied to general economic conditions and consumer confidence. Declines in RV unit shipment levels or reductions in industry growth could materially reduce the Company’s revenue from the RV industry and have a material adverse impact on its operating results in 2024 and other future periods.
Retail sales of RVs historically have been closely tied to general economic conditions and consumer confidence. Declines in RV unit shipment levels or reductions in industry growth could materially reduce the Company’s revenue from the RV industry and have a material adverse impact on its operating results in 2025 and other future periods.
The products produced by the RV and marine industries typically require gasoline or diesel fuel for their operation, or the use of a vehicle requiring gasoline or diesel fuel for their operation.
The products produced by the RV, powersports and marine industries typically require gasoline or diesel fuel for their operation, or the use of a vehicle requiring gasoline or diesel fuel for their operation.
A global economic downturn and related market uncertainty could negatively impact the availability of materials from one or more of these sources of these materials, especially during times such as we have recently seen when there are supplier constraints based on labor and other actions due to the COVID-19 pandemic.
A global economic downturn and related market uncertainty could negatively impact the availability of materials from one or more of these sources of these materials, especially during times such as we have recently seen when there are supplier constraints based on labor and other actions due to pandemic.
We compete not only with other suppliers 14 to the RV, marine, MH and industrial producers, but also with suppliers to traditional site-built homebuilders and suppliers of cabinetry and countertops. Sales could also be affected by pricing, purchasing, financing, advertising, operational, promotional, or other decisions made by purchasers of our products.
We compete not only with other suppliers to the RV, marine, powersports, MH and industrial producers, but also with suppliers to traditional site-built homebuilders and suppliers of cabinetry and countertops. Sales could also be affected by pricing, purchasing, financing, advertising, operational, promotional, or other decisions made by purchasers of our products.
We may be able to incur significant additional indebtedness in the future. Although the 2021 Credit Agreement and other debt instruments contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions could be substantial.
We may be able to incur significant additional indebtedness in the future. Although the 2024 Credit Agreement and other debt instruments contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions could be substantial.
If our cash balances, cash flows from operations, and availability under our 2021 Credit Facility are insufficient to finance our operations and alternative capital is not available, we may not be able to expand our business and make acquisitions, or we may need to curtail or limit our existing operations.
If our cash balances, cash flows from operations, and availability under our 2024 Credit Facility are insufficient to finance our operations and alternative capital is not available, we may not be able to expand our business and make acquisitions, or we may need to curtail or limit our existing operations.
In addition, our debt could have important consequences to us, including: • increase our vulnerability to general economic and industry conditions; • require a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our liquidity and our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities; 20 • expose us to the risk of increased interest rates, and corresponding increased interest expense, because borrowings pursuant to the credit agreement that established our revolving credit and term loan facility (the “2021 Credit Agreement”) are at variable rates of interest; • reduce funds available for working capital, capital expenditures, acquisitions and other general corporate purposes, due to the costs and expenses associated with such debt; • limit our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes; and • limit our ability to adjust to changing marketplace conditions and placing us at a competitive disadvantage compared to our competitors who may have less debt.
In addition, our debt could have important consequences to us, including: • increase our vulnerability to general economic and industry conditions; • require a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our liquidity and our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities; 21 Table of Contents • expose us to the risk of increased interest rates, and corresponding increased interest expense, because borrowings pursuant to the credit agreement that established our revolving credit and term loan facility (the “2024 Credit Agreement”) are at variable rates of interest; • reduce funds available for working capital, capital expenditures, acquisitions and other general corporate purposes, due to the costs and expenses associated with such debt; • limit our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes; and • limit our ability to adjust to changing marketplace conditions and placing us at a competitive disadvantage compared to our competitors who may have less debt.
The inability to retain our current letters of credit, to obtain alternative letter of credit sources, or to retain our 2021 Credit Agreement to support these programs could require us to post cash collateral, reduce the amount of cash available for our operations, or cause us to curtail or limit existing operations.
The inability to retain our current letters of credit, to obtain alternative letter of credit sources, or to retain our 2024 Credit Agreement to support these programs could require us to post cash collateral, reduce the amount of cash available for our operations, or cause us to curtail or limit existing operations.
The agreements covering our indebtedness contain various financial performance and other covenants. If we do not remain in compliance with these covenants, we could be in breach of our debt agreements and the amounts outstanding thereunder could become immediately due and payable.
The agreements governing our indebtedness contain various financial performance and other covenants. If we do not remain in compliance with these covenants, we could be in breach of our debt agreements and the amounts outstanding thereunder could become immediately due and payable.
If we fail to comply with the covenants contained in our 2021 Credit Agreement, the lenders could cause our debt to become due and payable prior to maturity or it could result in our having to refinance the indebtedness under unfavorable terms.
If we fail to comply with the covenants contained in our 2024 Credit Agreement, the lenders could cause our debt to become due and payable prior to maturity or it could result in our having to refinance the indebtedness under unfavorable terms.
Our business, results of operations and financial condition may be materially and adversely affected by any negative impact on the global economy and capital markets resulting from international conflicts, such as the conflict between Ukraine and Russia, or any other geopolitical tensions.
Our business, results of operations and financial condition may be materially and adversely affected by any negative impact on the global economy and capital markets resulting from international conflicts, such as the conflict between Ukraine and Russia and conflict in the Middle East, or any other geopolitical tensions.
Additionally, material unexpected liabilities could arise from these acquisitions. 17 We may incur material charges or be adversely impacted by the consolidation and/or closure of all or part of a manufacturing or distribution facility. We periodically assess the cost structure of our operating facilities with the objective to distribute and/or manufacture products in the most efficient manner.
Additionally, material unexpected liabilities could arise from these acquisitions. 18 Table of Contents We may incur material charges or be adversely impacted by the consolidation and/or closure of all or part of a manufacturing or distribution facility. We periodically assess the cost structure of our operating facilities with the objective to distribute and/or manufacture products in the most efficient manner.
The ultimate impact of public health emergencies, such as the COVID-19 pandemic, on our business, results of operations, financial condition and cash flows is highly uncertain and cannot be accurately predicted and is dependent on future developments, including the duration of such an event and the length of its impact on the global economy, and the actions taken by governmental bodies to contain it or mitigate its impact.
The ultimate impact of public health emergencies on our business, results of operations, financial condition and cash flows is highly uncertain and cannot be accurately predicted and is dependent on future developments, including the duration of such an event and the length of its impact on the global economy, and the actions taken by governmental bodies to contain it or mitigate its impact.
There can be no assurance that we will maintain compliance with the financial and other covenants under our 2021 Credit Agreement and other agreements governing our indebtedness.
There can be no assurance that we will maintain compliance with the financial and other covenants under our 2024 Credit Agreement and other agreements governing our indebtedness.
We depend on our cash balances, our cash flows from operations, our 2021 Credit Facility and other financing vehicles to finance our operating requirements, capital expenditures and other needs.
We depend on our cash balances, our cash flows from operations, our 2024 Credit Facility and other financing vehicles to finance our operating requirements, capital expenditures and other needs.
We have letters of credit representing collateral for our casualty insurance programs and for general operating purposes that have been issued under our 2021 Credit Agreement.
We have letters of credit representing collateral for our casualty insurance programs and for general operating purposes that have been issued under our 2024 Credit Agreement.
Approximately 71% of our total assets as of December 31, 2023 were comprised of goodwill, intangible assets, operating lease right-of-use assets and property, plant and equipment. Under generally accepted accounting principles, each of these assets is subject to periodic review and testing to determine whether the asset is recoverable or realizable.
Approximately 72% of our total assets as of December 31, 2024, were comprised of goodwill, intangible assets, operating lease right-of-use assets and property, plant and equipment. Under generally accepted accounting principles, each of these assets is subject to periodic review and testing to determine whether the asset is recoverable or realizable.
Our Articles of Incorporation and Amended and Restated By-laws contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids. These provisions may delay, defer or prevent a change in control that our shareholders might consider to be in their best interest.
Other Risks Certain provisions in our Articles of Incorporation and Amended and Restated By-laws may delay, defer or prevent a change in control that our shareholders might consider to be in their best interest. Our Articles of Incorporation and Amended and Restated By-laws contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids.
In addition, if any of our suppliers seek bankruptcy relief or otherwise cannot continue their business as anticipated, the availability or price of these requirements could be adversely affected.
In addition, if any of our suppliers seek bankruptcy relief or otherwise cannot continue their business as 16 Table of Contents anticipated, the availability or price of these requirements could be adversely affected.
The convertible note hedge transactions are expected generally to reduce the potential dilution upon conversion of the 1.75% Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be.
The convertible note hedge and warrant transactions are expected 23 Table of Contents generally to reduce the potential dilution upon conversion of the 1.75% Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be.
If additional tariffs or trade 16 restrictions are implemented by the U.S. or other countries, the cost of our products could increase which could adversely affect our business. If we are unable to manage our inventory, our operating results could be materially and adversely affected.
If additional tariffs or trade restrictions are implemented by the U.S. or other countries, the cost of our products could increase which could adversely affect our business. 17 Table of Contents If we are unable to manage our inventory, our operating results could be materially and adversely affected.
Additionally, we cannot control the decisions made by suppliers of our distributed and manufactured products and therefore, our ability to maintain our distribution arrangements may be adversely impacted.
Additionally, we cannot control the 15 Table of Contents decisions made by suppliers of our distributed and manufactured products and therefore, our ability to maintain our distribution arrangements may be adversely impacted.
In 2023 and 2022, the Company's net sales to the RV industry were approximately 43% and 53%, respectively, of consolidated net sales. While the Company measures its RV market sales against industry-wide wholesale shipment statistics, the underlying health of the RV industry is determined by retail demand.
In 2024 and 2023, the Company's net sales to the RV industry were approximately 44% and 43%, respectively, of consolidated net sales. While the Company measures its RV market sales against industry-wide wholesale shipment statistics, the underlying health of the RV industry is determined by retail demand.
Our business with our international suppliers could be adversely affected by restrictions on travel to and from any of the countries in which we do business due to a health epidemic or outbreak, such as the COVID-19 pandemic, or other event.
Our business with our international suppliers could be adversely affected by restrictions on travel to and from any of the countries in which we do business due to a health epidemic, pandemic outbreak, or other event.
Our 2021 Credit Agreement contains covenants that require that we comply with a maximum level of a consolidated secured net leverage ratio and a minimum level of a consolidated fixed charge coverage ratio (both covenants as described in Note 7 "Debt" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K).
Our 2024 Credit Agreement contains covenants that require that we comply with a maximum level of a consolidated secured net leverage ratio and a minimum level of a consolidated interest coverage ratio (both covenants as described in Note 7 "Debt" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K).
Public health emergencies, whether domestic or international, such as the COVID-19 pandemic, may have an adverse effect on our business, results of operations, financial position and cash flows. Pandemics, epidemics or disease outbreaks in the U.S. or globally may have a material adverse effect on our business, employees, suppliers, customers, and the general economy.
Public health emergencies, whether domestic or international, may have an adverse effect on our business, results of operations, financial position and cash flows. Pandemics, epidemics or disease outbreaks in the U.S. or globally may have a material adverse effect on our business, employees, suppliers, customers, and the general economy.
See Notes 8 "Derivative Financial Instruments" and 9 "Accrued Liabilities" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for additional details. The convertible note hedge and warrant transactions may affect the value of the 1.75% Convertible Notes and our common stock.
See Notes 7 "Debt" and 9 "Derivative Financial Instruments" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for additional details. The convertible note hedge and warrant transactions may affect the value of the 1.75% Convertible Notes and our common stock.
As of December 31, 2023, we had $1.04 billion of total long-term debt, including current maturities and exclusive of deferred financing costs and debt discount, outstanding under our 2021 Credit Facility, 4.75% Senior Notes, 7.50% Senior Notes and 1.75% Convertible Notes (all as defined in Note 7 "Debt" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K).
As of December 31, 2024, we had $1.33 billion of total long-term debt, including current maturities and exclusive of deferred financing costs and debt discount, outstanding under our 2024 Credit Facility, 4.75% Senior Notes, 6.375% Senior Notes and 1.75% Convertible Notes (all as defined in Note 7 "Debt" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K).
Changes in consumer preferences relating to our products could adversely impact our sales levels and our operating results. Changes in consumer preferences, or our inability to anticipate changes in consumer preferences for RVs, marine models or manufactured homes, or for the products we make could reduce demand for our products and adversely affect our operating results and financial condition.
Changes in consumer preferences, or our inability to anticipate changes in consumer preferences for RVs, marine models, powersports products or manufactured homes, or for the products we make could reduce demand for our products and adversely affect our operating results and financial condition.
Our sales are materially concentrated with two customers, the loss of either of which could have a material adverse impact on our operating results and financial condition. Two customers in the RV market accounted for a combined 29% of our consolidated net sales in 2023.
Two customers in the RV market accounted for a combined 29% of our consolidated net sales in 2024. The loss of either of these customers could have a material adverse impact on our operating results and financial condition.
Additional risks associated with our foreign business include restrictive trade policies, imposition of duties, taxes, or government royalties by foreign governments, and compliance with the Foreign Corrupt Practices Act and local anti-bribery laws.
Additional risks associated with our foreign business include restrictive trade policies, imposition of duties, taxes, or government royalties by foreign governments, imposition of tariffs by the United States on products we import from certain countries, and compliance with the Foreign Corrupt Practices Act and local anti-bribery laws.
While we seek to ensure the Company remains compliant with tax regulations in all jurisdictions in which we operate, new legislation or changes in existing legislation may result in changes to amounts owed for income, personal and real property taxes.
Changes thereto can have impacts on taxes paid, exposure to liabilities, and financial results of the Company. While we seek to ensure the Company remains compliant with tax regulations in all jurisdictions in which we operate, new legislation or changes in existing legislation may result in changes to amounts owed for income, personal and real property taxes.
U.S. and global markets may experience volatility and disruptions resulting from geopolitical tensions or military conflict, such as the military conflict between Ukraine and Russia. The length and impact of geopolitical tensions or military conflict are highly unpredictable, and can lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.
The length and impact of geopolitical tensions or military conflict are highly unpredictable, and can lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.
The United States has imposed tariffs and export controls on certain goods and products imported from China and certain other countries, such as plywood, which has resulted in retaliatory tariffs by China and other countries.
The United States has imposed tariffs and export controls on certain goods and products imported from China, Mexico, Canada and certain other countries, such as plywood, which has resulted in retaliatory tariffs by China and other countries and additional tariffs may be imposed by the current U.S. administration on products imported from China, Mexico and Canada.
The conditional conversion feature of the 1.75% Convertible Notes due 2028 that we issued in December 2021, if triggered, may adversely affect our financial condition and operating results.
The conditional conversion feature of the 1.75% Convertible Notes due 2028 may adversely affect our financial condition and operating results.
Failure to comply with present or future regulations could result in fines or potential civil or criminal liability, which could negatively impact our results of operations or financial condition. 18 We are subject to federal, state, local and certain international tax regulation. Changes thereto can have impacts on taxes paid, exposure to liabilities, and financial results of the Company.
Failure to comply with present or future regulations could result in fines or potential civil or criminal liability, which could negatively impact our results of operations or financial condition. 19 Table of Contents We are subject to federal, state, local and certain international tax regulation.
The loss of either of these customers could have a material adverse impact on our operating results and financial condition. We do not have long-term agreements with our customers and cannot predict that we will maintain our current relationships with these customers or that we will continue to supply them at current levels.
We do not have long-term agreements with our customers and cannot predict that we will maintain our current relationships with these customers or that we will continue to supply them at current levels. Changes in consumer preferences relating to our products could adversely impact our sales levels and our operating results.
Many of our customers participate in highly competitive markets and their financial condition may deteriorate 13 as a result. In addition, a decline in the financial condition of our customers could hinder our ability to collect amounts owed by customers.
Many of our customers participate in highly competitive markets and their financial condition may deteriorate as a result.
If we or our suppliers experience additional material data security breaches or fail to detect and appropriately respond to material data security breaches, we could be exposed to costly government enforcement actions and private litigation and our business and operating results could suffer. 23 Other Risks Certain provisions in our Articles of Incorporation and Amended and Restated By-laws may delay, defer or prevent a change in control that our shareholders might consider to be in their best interest.
If we or our suppliers experience additional material data security breaches or fail to detect and appropriately respond to material data 24 Table of Contents security breaches, we could be exposed to costly government enforcement actions and private litigation and our business and operating results could suffer.
Evolving trade policies could continue to make sourcing products from foreign countries difficult and costly, as the Company sources a significant amount of its products from outside of the United States. In addition, prices of certain raw materials have historically been volatile and continued to fluctuate in 2023.
Evolving trade policies could continue to make sourcing products from foreign countries difficult and costly, as the Company sources a significant amount of its products from outside of the United States including from China, Mexico and Canada which may be subject to additional tariffs imposed by the current U.S. administration.
Conditions within the insurance markets could impact our ability to negotiate favorable terms and conditions for various liability coverage and could potentially result in uninsured losses. We generally negotiate our insurance contracts annually for property, casualty, workers compensation, general liability, health insurance, and directors and officers liability coverage.
These provisions may delay, defer or prevent a change in control that our shareholders might consider to be in their best interest. Conditions within the insurance markets could impact our ability to negotiate favorable terms and conditions for various liability coverage and could potentially result in uninsured losses.
Removed
In addition, even if holders do not elect to convert their 1.75% Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 1.75% Convertible Notes as a current rather than long-term liability.
Added
In addition, a decline in the financial condition of our customers could hinder our ability to collect amounts owed by customers. 14 Table of Contents Our sales are materially concentrated with two customers, the loss of either of which could have a material adverse impact on our operating results and financial condition.
Added
In addition, prices of certain raw materials have historically been volatile and continued to fluctuate in 2024.
Added
An event of default could also result in events of default under other debt agreements that contain cross-acceleration or cross-default provisions, which could permit counterparties thereunder to exercise remedies.
Added
This conditional conversion feature is triggered for a given calendar quarter if the last reported price of our common stock is more than or equal to 130% of the conversion price for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter.
Added
Because this condition was satisfied during the calendar quarter ended December 31, 2024, the conditional conversion feature was triggered as of December 31, 2024 and the 1.75% Convertible Notes are convertible, in whole or in part, at the option of the holders from January 1, 2025 to March 31, 2025.
Added
Whether the 1.75% Convertible Notes will be convertible in subsequent periods will depend on the continued satisfaction of this condition or another conversion condition in the future.
Added
While we continually measure the risk/reward of policy limits and coverage, the lack of coverage in certain circumstances could result in potential uninsured losses.
Added
U.S. and global markets may experience volatility and disruptions resulting from geopolitical tensions or military conflict, such as the military conflict between Ukraine and Russia and conflict in the Middle East.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−1 removed13 unchanged
Biggest changeNotwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us, but we do ensure all proper cybersecurity protocol and due diligence is applied across the organization.
Biggest changeWe rely heavily on our supply chain to deliver our products and services to our customers, and a cybersecurity incident at a supplier, subcontractor or third-party partner could materially adversely impact us. 26 Table of Contents Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us, but we do ensure all proper cybersecurity protocol and due diligence is applied across the organization.
While Patrick maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks. 25
While Patrick maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks.
Removed
We rely heavily on our supply chain to deliver our products and services to our customers, and a cybersecurity incident at a supplier, subcontractor or third-party partner could materially adversely impact us.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed0 unchanged
Biggest changeLeased Owned Purpose / Nature # of Properties Square Footage # of Properties Square Footage Manufacturing 145 7,840,000 34 2,230,000 Distribution 48 1,975,000 14 493,000 Manufacturing & Distribution (shared space) 1 127,000 1 94,000 Corporate & Other 14 109,000 1 35,000 Total 208 10,051,000 50 2,852,000 Pursuant to the terms of the Company’s 2021 Credit Agreement, most of our owned real property is subject to a security interest.
Biggest changeLeased Owned Purpose / Nature: # of Properties Square Footage # of Properties Square Footage Manufacturing 145 8,373,000 34 2,097,000 Distribution 41 1,607,000 6 358,000 Manufacturing & Distribution (shared space) 3 536,000 1 94,000 Corporate & Other 24 117,000 1 35,000 Total 213 10,633,000 42 2,584,000 Pursuant to the terms of the Company’s 2024 Credit Agreement, most of our owned real property is subject to a security interest.
ITEM 2. PROPERTIES Patrick believes the facilities occupied as of December 31, 2023 are adequate for the purposes for which they are currently being used and are well-maintained. The Company may, as part of its strategic operating plan, further consolidate and/or close certain owned facilities and may not renew leases on property with near-term lease expirations.
ITEM 2. PROPERTIES Patrick believes the facilities occupied as of December 31, 2024, are adequate for the purposes for which they are currently being used and are well-maintained. The Company may, as part of its strategic operating plan, further consolidate and/or close certain owned facilities and may not renew leases on property with near-term lease expirations.
Use of our manufacturing and distribution facilities may vary with seasonal, economic, and other business conditions. Our primary corporate office is located in Elkhart, Indiana. In 2023 , the Company operated in 23 states in the U.S., Mexico, China and Canada.
Use of our manufacturing and distribution facilities may vary with seasonal, economic, and other business conditions. Our primary corporate office is located in Elkhart, Indiana. In 2024 , the Company operated in 25 states in the U.S., Mexico, China and Canada.
As of December 31, 2023 , the Company leased approximately 10.1 million square feet of manufacturing, distribution and corporate facilities and owned approximately 2.9 million square feet, as listed below.
As of December 31, 2024 , the Company leased approximately 10.6 million square feet of manufacturing, distribution and corporate facilities and owned approximately 2.6 million square feet, as listed below.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeSee Note 14 "Commitments and Contingencies" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for further discussion of legal matters in relation to commitments and contingencies. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeSee Note 15 "Commitments and Contingencies" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for further discussion of legal matters in relation to commitments and contingencies. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−0 removed0 unchanged
Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) Oct. 2 - Oct. 29, 2023 81,474 $ 72.24 81,474 $ 78,254,795 Oct. 30 - Dec. 3, 2023 10,187 74.50 9,317 77,569,000 Dec. 4 - Dec. 31, 2023 91,674 98.56 — 77,569,000 Total 183,335 90,791 (1) Amount includes 92,544 shares of common stock purchased by the Company in aggregate in November and December 2023 for the sole purpose of covering the exercise price related to the exercise of stock options and satisfying minimum tax withholding obligations of employees upon the vesting of stock awards and the exercise of stock options held by the employees.
Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) September 30 - October 27, 2024 549 $ 96.14 — $ 77,569,000 October 28 - December 1, 2024 61,098 77.68 60,000 200,000,000 December 2 - December 31, 2024 1,365 55.39 — 200,000,000 Total 63,012 60,000 (1) Amount includes 3,012 shares of common stock purchased by the Company in aggregate in October, November and December 2024 for the sole purpose of satisfying minimum tax withholding obligations of employees upon the vesting of stock awards held by the employees.
A number of shares are held in broker and nominee names on behalf of beneficial owners. Dividends In December 2019, the Company's Board of Directors (the "Board") adopted a dividend policy under which it plans to declare regular quarterly cash dividends.
A number of shares are held in broker and nominee names on behalf of beneficial owners. 27 Table of Contents Dividends In December 2019, the Company's Board of Directors (the "Board") adopted a dividend policy under which it plans to declare regular quarterly cash dividends.
(2) See Note 11 "Stock Repurchase Programs" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for additional information about the Company's stock repurchase program. 27 Stock Performance Graph The following graph compares the cumulative 5-year total return to shareholders of the Company’s common stock relative to the cumulative total returns of the Russell 2000 index and a customized peer group of companies, which includes Brunswick Corporation, Cavco Industries, Inc., LCI Industries, Malibu Boats, Inc., Polaris Inc., Thor Industries, Inc., Winnebago Industries, Inc., and Wabash National Corporation.
(2) See Note 12 "Stock Repurchase Programs" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for additional information about the Company's stock repurchase program. 28 Table of Contents Stock Performance Graph The following graph compares the cumulative 5-year total return to shareholders of the Company’s common stock relative to the cumulative total returns of the Russell 2000 index and a customized peer group of companies, which includes Brunswick Corporation, Cavco Industries, Inc., LCI Industries, Malibu Boats, Inc., Polaris Inc., Thor Industries, Inc., Winnebago Industries, Inc., and Wabash National Corporation.
This graph assumes an initial investment of $100 (with reinvestment of all dividends) was made in our common stock, in the index and in the peer group on December 31, 2018 and its relative performance is tracked through December 31, 2023.
This graph assumes an initial investment of $100 (with reinvestment of all dividends) was made in our common stock, in the index and in the peer group on December 31, 2019, and its relative performance is tracked through December 31, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company's common stock is listed on The NASDAQ Global Stock Market under the symbol PATK. Holders of Common Stock As of February 16, 2024, there were 318 shareholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company's common stock is listed on The NASDAQ Global Stock Market under the symbol PATK. Holders of Common Stock As of February 14, 2025, there were approximately 280 shareholders of record.
Any future determination to pay cash dividends will be made by the Board in light of the Company’s earnings, financial position, capital requirements, and restrictions under the Company’s 2021 Credit Agreement, and such other factors as the Board deems relevant. 26 Purchases of Equity Securities by the Issuer (c) Issuer Purchases of Equity Securities for the three months ended December 31, 2023 .
Any future determination to pay cash dividends will be made by the Board in light of the Company’s earnings, financial position, capital requirements, and restrictions under the Company’s 2024 Credit Agreement, and such other factors as the Board deems relevant.
The Company paid cash dividends of $1.90 and $1.44 per share, or $42.1 million and $32.9 million in the aggregate, in 2023 and 2022, respectively.
The Company paid cash dividends of $1.50 and $1.27 per share, or $50.2 million and $42.1 million in the aggregate, in 2024 and 2023, respectively.
($) 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Patrick Industries, Inc. $ 100.00 $ 177.93 $ 236.31 $ 282.90 $ 217.68 $ 369.19 Peer Group $ 100.00 $ 148.13 $ 175.17 $ 221.39 $ 171.50 $ 225.72 Russell 2000 $ 100.00 $ 123.72 $ 146.44 $ 166.50 $ 130.60 $ 150.31 *The stock price performance included in this graph is not necessarily indicative of future stock price performance.
($) 12/31/2019 12/31/2020 12/31/2021 12/30/2022 12/31/2023 12/31/2024 Patrick Industries, Inc. $ 100.00 $ 132.78 $ 158.95 $ 122.26 $ 207.39 $ 262.33 Peer Group $ 100.00 $ 115.84 $ 145.14 $ 112.44 $ 146.32 $ 114.29 Russell 2000 $ 100.00 $ 118.36 $ 134.57 $ 105.56 $ 121.49 $ 133.66 *The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Added
Purchases of Equity Securities by the Issuer Issuer Purchases of Equity Securities for the three months ended December 31, 2024 .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

58 edited+32 added−18 removed14 unchanged
Biggest changeNet cash provided by operating activities decreased $3.0 million, or 1%, to $408.7 million in 2023 from $411.7 million in 2022 primarily due to a decrease in net income of $185.3 million, substantially offset by an increase in depreciation and amortization of $13.7 million and a $98.9 million source of cash from operating assets and liabilities compared to a $60.7 million use of cash from operating assets and liabilities in the prior period.
Biggest changeThe decrease in operating cash flows is primarily attributable to a decrease in operating assets and liabilities, net of business acquisitions, as a source of cash of $93.3 million, from $98.9 million in 2023 compared to $5.6 million in 2024, a decrease in net income of $4.5 million and an increase in deferred income taxes of $5.9 million, partially offset by increased depreciation and amortization expense of $22.0 million and loss on extinguishment of debt of $2.5 million.
Working capital requirements vary from period to period depending on manufacturing volumes primarily related to the RV, marine, MH and industrial markets we serve, the timing of deliveries, and the payment cycles of customers.
Working capital requirements vary from period to period depending on manufacturing volumes primarily related to the RV, marine, powersports, MH and industrial markets we serve, the timing of deliveries, and the payment cycles of customers.
No changes in the year ended December 31, 2023 to provisional fair value estimates of assets acquired and liabilities assumed in acquisitions were material. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop the acquisition date fair value estimates, we could record future impairment charges.
No changes in the year ended December 31, 2024 to provisional fair value estimates of assets acquired and liabilities assumed in acquisitions were material. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop the acquisition date fair value estimates, we could record future impairment charges.
As of December 31, 2023, the Company's existing cash and cash equivalents, cash generated from operations, and available borrowings under its 2021 Credit Facility are expected to be sufficient to meet anticipated cash needs for working capital and capital expenditures for at least the next 12 months, exclusive of any acquisitions, based on its current cash flow budgets and forecast of short-term and long-term liquidity needs.
As of December 31, 2024, the Company's existing cash and cash equivalents, cash generated from operations, and available borrowings under its 2024 Credit Facility are expected to be sufficient to meet anticipated cash needs for working capital and capital expenditures for at least the next 12 months, exclusive of any acquisitions, based on its current cash flow budgets and forecast of short-term and long-term liquidity needs.
Based on the results of the Company's analyses, the estimated fair value of each of the Company's reporting units and trademarks was determined to exceed the carrying value for each of the years ended December 31, 2023, 2022 and 2021 and so no impairments were recognized.
Based on the results of the Company's analyses, the estimated fair value of each of the Company's reporting units and trademarks was determined to exceed the carrying value for each of the years ended December 31, 2024, 2023 and 2022 and so no impairments were recognized.
Cash Flows Year Ended December 31, 2023 Compared to 2022 Operating Activities Cash flows from operating activities are one of the Company's primary sources of liquidity, representing the net income the Company earned in the reported periods, adjusted for non-cash items and changes in operating assets and liabilities.
Cash Flows Year Ended December 31, 2024 Compared to 2023 Operating Activities: Cash flows from operating activities are one of the Company's primary sources of liquidity, representing the net income the Company earned in the reported periods, adjusted for certain non-cash items and changes in operating assets and liabilities.
The Company’s reporting units are defined as one level below our operating segments, Manufacturing and Distribution, which are the same as our reportable segments. In evaluating goodwill for impairment, either a qualitative or quantitative assessment is performed.
The Company’s reporting units are defined as one level below our operating segments, Manufacturing and Distribution, which are the same as our reportable segments. In evaluating goodwill for impairment, either a qualitative or quantitative assessment is performed. The Company performed a quantitative assessment for all reporting units in 2024.
In addition, we estimate the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired assets could be impaired.
In addition, we estimate the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired assets could be impaired. 36 Table of Contents
Economic or industry-wide factors affecting the profitability of our RV, marine, MH and industrial businesses include the costs of commodities and supply chain constraints and the labor used to manufacture our products, the competitive 30 environment and the impact of different gross margin profiles of acquired companies, all of which can cause gross margins to fluctuate from quarter-to-quarter and year-to-year.
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 the labor used to manufacture our products, the competitive environment and the impact of different gross margin profiles of acquired companies, all of which can cause gross margins to fluctuate from quarter-to-quarter and year-to-year.
Off-Balance Sheet Arrangements None. 34 CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Goodwill represents the excess of cost over the fair value of the net assets acquired. Other intangible assets acquired are classified as customer relationships, non-compete agreements, patents and trademarks.
The Company’s acquisitions include purchased goodwill and other intangible assets. Goodwill represents the excess of cost over the fair value of the net assets acquired. Other intangible assets acquired are classified as customer relationships, non-compete agreements, patents and trademarks.
The Company's primary sources of liquidity are cash flows from operations, which includes selling its products and collecting receivables, available cash reserves and borrowing capacity available under the 2021 Credit Facility as discussed in Note 7 "Debt" of the Notes to Consolidated Financial Statements.
The Company's primary sources of liquidity are cash flows from operations, which includes selling its products and collecting receivables, available cash reserves and borrowing capacity available under the revolving credit and term loan facility (the “2024 Credit Facility”) as discussed in Note 7 "Debt" of the Notes to Consolidated Financial Statements.
Although management believes that its estimates and assumptions are reasonable, they are based upon information available when they are made. Actual results may differ materially from these estimates under different assumptions or conditions. The Company has identified the following critical accounting policies and estimates: Goodwill and Other Intangible Assets. The Company’s acquisitions include purchased goodwill and other intangible assets.
Although management believes that its estimates and assumptions are reasonable, they are based upon information available when they are made. Actual results may differ materially from these estimates under different assumptions or conditions. The Company has identified the following critical accounting policies and estimates: 35 Table of Contents Goodwill and Other Intangible Assets.
Principal uses of cash are to support working capital demands, meet debt service requirements and support the Company's capital allocation strategy, which includes acquisitions, capital expenditures, dividends and repurchases of the Company’s common stock, among others.
LIQUIDITY AND CAPITAL RESOURCES Our liquidity requirements are primarily to support working capital demands, meet debt service requirements and support the Company's capital allocation strategy, which includes acquisitions, capital expenditures, dividends and repurchases of the Company’s common stock, among others.
Following a dealer inventory restocking in the first half of 2022, OEMs dramatically reduced production in the second half of 2022 and throughout 2023 as retail demand decreased and dealer inventory needs decreased, with the OEMs demonstrating operating discipline to maintain a balanced inventory channel for the long-term health and stability of the industry.
Following a dealer inventory restocking in the first half of 2024, OEMs reduced production slightly in the second half of 2024 as retail demand decreased, with dealers managing inventory levels and the OEMs demonstrating operating discipline to maintain a balanced inventory channel for the long-term health and stability of the industry.
The required maximum consolidated secured net leverage ratio and the required minimum consolidated fixed charge coverage ratio, as such ratios are defined in the 2021 Credit Agreement, compared to the actual amounts as of December 31, 2023 and for the fiscal period then ended are as follows: Required Actual Consolidated secured net leverage ratio (12-month period) 2.75 0.27 Consolidated fixed charge coverage ratio (12-month period) 1.50 3.01 In addition, as of December 31, 2023, the Company's consolidated total net leverage ratio (12-month period) was 2.38.
The required maximum consolidated secured net leverage ratio and the required minimum consolidated interest coverage ratio, as such ratios are defined in the 2024 Credit Agreement, compared to the actual amounts as of December 31, 2024 and for the fiscal period then ended are as follows: Required Actual Consolidated secured net leverage ratio (12-month period) 2.75 0.40 Consolidated interest coverage ratio (12-month period) 3.00 6.05 In addition, as of December 31, 2024, the Company's consolidated total net leverage ratio (12-month period) was 2.71.
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 decreased $277.7 million or 26%, to $782.2 million in 2023 from $1,059.9 million in 2022.
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. 31 Table of Contents Gross Profit.
Additionally, certain 2022 and 2023 acquisitions operate with comparatively higher SG&A as a percentage of sales when compared to the consolidated percentage. Amortization of Intangible Assets. Amortization of intangible assets increased $5.5 million, or 8%, in 2023 compared to 2022. The increase in 2023 compared to 2022 reflects the impact of intangible assets of businesses acquired in 2023 and 2022.
Additionally, certain 2023 and 2024 acquisitions operate with comparatively higher SG&A as a percentage of sales when compared to the consolidated percentage. Amortization of Intangible Assets. Amortization of intangible assets increased $17.6 million, or 22%, in 2024 compared to 2023.
As a percentage of net sales, gross profit increased to 22.6% in 2023 from 21.7% in 2022. The increase in gross profit as a percentage of net sales in 2023 compared to 2022 reflects the impact of the factors discussed above under “Cost of Goods Sold”.
The decrease in gross profit as a percentage of net sales in 2024 compared to 2023 reflects the impact of the factors discussed above under “Cost of Goods Sold”.
While this ratio was a covenant under the Company’s previous credit agreement and is not a covenant under the 2021 Credit Agreement, it is used in the determination of the applicable borrowing margin under the 2021 Credit Agreement.
While this ratio is not a covenant under the 2024 Credit Agreement, it is used in determining the applicable borrowing margin under the 2024 Credit Agreement.
Operating Income. Operating income decreased $236.0 million, or 48%, to $260.2 million in 2023 from $496.2 million in 2022. Operating income in 2023 and 2022 included $1.0 million and $19.4 million, respectively, from the businesses acquired in each respective year. Operating income as a percentage of net sales decreased 270 basis points to 7.5% in 2023 from 10.2% in 2022.
Operating income in 2024 and 2023 included $47.2 million and $1.0 million, respectively, from the businesses acquired in each respective year. Operating income as a percentage of net sales decreased 60 basis points to 6.9% in 2024 compared to 7.5% in 2023.
Reconciliations of the amounts below to consolidated totals are presented in Note 16 "Segment Information" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K.
The table below presents information about the net sales, gross profit, and operating income of the Company’s segments. Reconciliations of the amounts below to consolidated totals are presented in Note 17 "Segment Information" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K.
Income Taxes. Income tax expense decreased $58.9 million, or 55%, to $48.4 million in 2023 from $107.2 million in 2022 as a result of the decrease in pre-tax income and an increase in the effective tax rate. For 2023, the effective tax rate was 25.3% compared to 24.6% in 2022.
Income tax expense decreased $8.2 million, or 17%, to $40.2 million in 2024 compared to $48.4 million in 2023 as a result of the decrease in pre-tax income and a decrease in the effective tax rate. For 2024, the effective tax rate was 22.5% compared to 25.3% in 2023.
As a percentage of net sales, cost of goods sold decreased 90 basis points during 2023 to 77.4% from 78.3% in 2022.
As a percentage of net sales, cost of goods sold increased 10-basis points during 2024 to 77.5% compared to 77.4% in 2023.
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.
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.
According to the RV Industry Association (“RVIA”), wholesale industry unit shipments totaled approximately 313,200 units in 2023, a decrease of 37% compared to approximately 493,300 units in 2022. RV industry retail unit sales totaled approximately 377,500 units in 2023, a decrease of 15% compared to 2022 retail unit sales of approximately 446,300 units according to Statistical Surveys, Inc. ("SSI").
According to the RV Industry Association (“RVIA”), RV industry wholesale unit shipments totaled approximately 333,700 units in 2024, an increase of 7% from approximately 313,200 units in 2023. According to Statistical Surveys, Inc. ("SSI"), RV industry retail unit sales totaled approximately 352,700 units in 2024, a decrease of 7% from approximately 380,700 units in 2023.
If the qualitative assessment indicates it is more likely than not that the fair value of the reporting unit is less than its carrying value, the Company performs a quantitative assessment. When estimating reporting unit fair value with the quantitative assessment, the Company uses a combination of market and income-based methodologies.
When estimating reporting unit fair value with a quantitative assessment, the Company uses a combination of market and income-based methodologies.
Significant estimates and assumptions include subjective and/or complex judgments regarding items such as discount rates, customer attrition rates, royalty rates, and other factors, including estimated future cash flows that we expect to generate from the acquired assets. 35 The acquisition method of accounting also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.
The acquisition method of accounting also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.
Net sales pertaining to the manufacturing and distribution segments as stated in the table below and in the following discussions include intersegment sales. Gross profit includes the impact of intersegment operating activity. The table below presents information about the net sales, gross profit, and operating income of the Company’s segments.
See Notes 17 "Segment Information" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for additional details. Net sales pertaining to the manufacturing and distribution segments as stated in the table below and in the following discussions include intersegment sales. Gross profit includes the impact of intersegment operating activity.
Overall, our revenues in these markets are focused on the residential housing, hospitality, high-rise housing and office, commercial construction and institutional furniture markets. We estimate that approximately 70% to 80% of our industrial business is directly tied to the residential housing market, with the remaining industrial sales directly tied to the non-residential and commercial markets.
We estimate that approximately 75% to 85% of our industrial business is directly tied to the residential housing market, with the remaining industrial sales tied to the non-residential and commercial markets.
The decrease in warehouse and delivery expenses is attributable to the decrease in sales, and the increase as a percentage of net sales is primarily attributed to the fixed nature of certain expenses such as personnel wages, building charges, fleet expense, insurance, and depreciation among others as well as a decrease in load efficiency. Selling, General and Administrative ("SG&A") Expenses.
The increase in warehouse and delivery expenses in 2024 compared to 2023 is primarily attributable to the increase in sales, and the increase as a percentage of net sales is primarily related to an increase in certain expenses that are fixed in nature, including fleet and insurance expenses. Selling, General and Administrative ("SG&A") Expenses.
The decrease in operating income and operating margin is primarily attributable to lower net sales and the items discussed above. Interest Expense, Net. Interest expense, net, increased $8.2 million, or 13%, to $68.9 million in 2023 from $60.8 million in 2022.
The decrease in operating income as a percentage of net sales is primarily attributable to the items discussed above. Interest Expense, Net. Interest expense, net, increased $10.5 million, or 15%, to $79.5 million in 2024 compared to $68.9 million in 2023.
The increase in gross profit as a percentage of net sales for 2023 is primarily attributed to decreases in labor as a percentage of net sales partly offset by increases in material costs as a percentage of net sales. Operating Income. Operating income in 2023 decreased $46.8 million, or 34%, to $90.1 million from $136.9 million in 2022.
As a percentage of sales, gross profit increased 90 basis points 22.9% in 2024 compared to 22.0% in 2023. The increase in gross profit as a percentage of net sales for 2024 is primarily attributed to decreases in material and labor costs as a percentage of net sales. Operating Income.
Industrial Market The industrial market is comprised primarily of the solid surface countertop industry, kitchen cabinet industry, high-rise, hospitality, retail and commercial fixtures market, office and household furniture market and regional distributors. Net sales to this market represented 14% of our consolidated net sales in 2023 , decreasing 14% in 2023 compared to 2022.
Industrial Market The industrial market is comprised primarily of 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% and 14% of the Company's consolidated net sales for the years ended December 31, 2024 and 2023, respectively.
Financing Activities Net cash flows used in financing activities increased $143.3 million to $333.6 million in 2023 compared to $190.3 million in 2022.
Financing Activities Net cash flows provided by financing activities was $208.2 million in 2024 compared to net cash flows used in financing activities of $333.6 million in 2023.
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. 29 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, 2023, 2022 and 2021.
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.
Operating income for the Distribution segment attributable to acquisitions completed in 2023 and 2022 was immaterial. The decrease in operating income in 2023 primarily reflects the items discussed above.
Distribution segment operating income increased $14.6 million, or 16%, to $104.7 million in 2024 compared to $90.1 million in 2023. For 2024 and 2023 distribution segment operating income attributable to acquisitions completed in each of those years was immaterial. The increase in operating income in 2024 primarily reflects the items discussed above.
For 2023, these factors contributed to a 50-basis point decrease in labor as a percentage of net sales and a 330-basis point decrease in materials cost as a percentage of net sales, partially offset by a 300-basis point increase in overhead as a percentage of net sales due to lower sales volumes.
Cost of goods sold as a percentage of net sales increased in 2024 compared to 2023 primarily as a result of a 50-basis point increase in overhead as a percentage of net sales due to higher research and development costs, partially offset by a 40-basis point decrease in labor as a percentage of net sales.
Our marine revenue is generally correlated to marine wholesale powerboat unit shipments, which decreased 2% to approximately 192,300 units in 2023 compared to approximately 196,500 units in 2022, according to Company estimates based on data published by the National Marine Manufacturers Association ("NMMA").
According to Company estimates based on data published by the National Marine Manufacturers Association ("NMMA"), wholesale powerboat unit shipments totaled approximately 143,900 units in 2024, a decrease of 25% compared to 192,300 units in 2023. According to SSI, we estimate marine retail powerboat shipments totaled approximately 165,000 units in 2024, a decrease of 8% from approximately 179,500 units in 2023.
Warehouse and Delivery Expenses. Warehouse and delivery expenses decreased $19.1 million, or 12%, to $143.9 million in 2023 from $163.0 million in 2022. As a percentage of net sales, warehouse and delivery expenses were 4.1% in 2023 and 3.3% in 2022.
Warehouse and Delivery Expenses. Warehouse and delivery expenses increased $11.9 million, or 8%, to $155.8 million in 2024 compared to $143.9 million in 2023. As a percentage of net sales, warehouse and delivery expenses increased 10 basis points to 4.2% in 2024 compared to 4.1% in 2023.
BUSINESS SEGMENTS The Company's reportable segments, manufacturing and distribution, are based on its method of internal reporting. The Company regularly evaluates the performance of the manufacturing and distribution segments and allocates resources to them based on a variety of indicators including net sales and operating income.
The Company regularly evaluates the performance of the manufacturing and distribution segments and allocates resources to them based on a variety of indicators including net sales and operating income. The Company does not measure profitability at the 32 Table of Contents end market (RV, marine, powersports, MH and industrial) level.
Marine Industry Net sales to the marine industry, which represented approximately 27% of the Company's consolidated net sales in 2023, decreased 11% in 2023 compared to 2022.
Marine Industry Net sales to the marine industry comprised approximately 15% and 23% of the Company's consolidated net sales for the years ended December 31, 2024 and 2023, respectively. Net sales to the marine industry in the year ended December 31, 2024 decreased 27% compared to 2023.
SG&A expenses decreased $28.1 million, or 9%, to $299.4 million in 2023 from $327.5 million in 2022. As a percentage of net sales, SG&A expenses were 8.6% in 2023 and 6.7% in 2022. The decrease in SG&A expenses in 2023 compared to 2022 is primarily due to lower variable expenses, such as commissions, associated with the decrease in net sales.
SG&A expenses increased $26.3 million, or 9%, to $325.8 million in 2024 compared to $299.4 million in 2023. As a percentage of net sales, SG&A expenses were 8.8% in 2024 and 8.6% in 2023.
Year Ended December 31, ($ in thousands) 2023 2022 2021 Net sales $ 3,468,045 100.0 % $ 4,881,872 100.0 % $ 4,078,092 100.0 % Cost of goods sold 2,685,812 77.4 3,821,934 78.3 3,276,898 80.4 Gross profit 782,233 22.6 1,059,938 21.7 801,194 19.6 Warehouse and delivery expenses 143,921 4.1 163,026 3.3 139,606 3.4 Selling, general and administrative expenses 299,418 8.6 327,513 6.7 253,547 6.2 Amortization of intangible assets 78,694 2.3 73,229 1.5 56,329 1.4 Operating income 260,200 7.5 496,170 10.2 351,712 8.6 Interest expense, net 68,942 2.0 60,760 1.2 57,890 1.4 Income taxes 48,361 1.5 107,214 2.2 68,907 1.7 Net income $ 142,897 4.1 $ 328,196 6.7 $ 224,915 5.5 Year Ended December 31, 2023 Compared to 2022 Net Sales.
Year Ended December 31, $ Change % Change ($ in thousands) 2024 2023 Net sales $ 3,715,683 100.0 % $ 3,468,045 100.0 % $ 247,638 7 % Cost of goods sold 2,879,793 77.5 2,685,812 77.4 193,981 7 Gross profit 835,890 22.5 782,233 22.6 53,657 7 Warehouse and delivery expenses 155,821 4.2 143,921 4.1 11,900 8 Selling, general and administrative expenses 325,754 8.8 299,418 8.6 26,336 9 Amortization of intangible assets 96,275 2.6 78,694 2.3 17,581 22 Operating income 258,040 6.9 260,200 7.5 (2,160) (1) Interest expense, net 79,470 2.1 68,942 2.0 10,528 15 Income taxes 40,169 1.1 48,361 1.5 (8,192) (17) Net income $ 138,401 3.7 $ 142,897 4.1 $ (4,496) (3) Year Ended December 31, 2024 Compared to 2023 Net Sales.
Sales decreased $1.03 billion, or 28%, to $2.65 billion in 2023 from $3.68 billion in 2022. This segment accounted for approximately 75% of the Company’s consolidated net sales in 2023 compared to approximately 74% of the Company's consolidated net sales in 2022. The sales decrease reflects decreased net sales across all of our end markets.
Manufacturing sales increased $103.2 million, or 4%, to $2.76 billion in 2024 compared to $2.65 billion in 2023. The manufacturing segment accounted for approximately 74% of the Company’s consolidated net sales in 2024 compared to approximately 75% of the Company's consolidated net sales in 2023.
Sales decreased $398.2 million, or 31%, to $889.4 million in 2023 from $1,287.6 million in 2022. This segment accounted for approximately 25% of the Company’s consolidated net sales for 2023 compared to 26% of the Company's consolidated net sales in 2022. The decrease in sales in 2023 is attributed to decreased net sales across all of our end markets.
The distribution segment accounted for approximately 26% of the Company’s consolidated net sales for 2024 compared to 25% of the Company's consolidated net sales in 2023. Distribution segment sales in 2024 compared to 2023 increased due to increased sales to all five of our end markets.
In 2023 and 2022, net sales attributable to acquisitions completed in each of those periods was approximately $14.1 million and $0.5 million, respectively. Gross Profit. Gross profit decreased $59.4 million, or 23%, to $195.5 million in 2023 from $254.9 million in 2022. As a percentage of net sales, gross profit was 22.0% in 2023 compared to 19.8% in 2022.
For 2024 and 2023, distribution segment sales attributable to acquisitions completed in each of those years were $20.3 million and $14.1 million, respectively. Gross Profit. Distribution segment gross profit increased $29.4 million, or 15%, to $224.9 million in 2024 compared to $195.5 million in 2023.
The increase in cash flows used in financing activities was primarily due to the $172.5 million repayment of the 1.00% Convertible Notes and $25.6 million in net repayments on the Revolver due 2027, partially offset by a $58.3 million reduction in stock repurchases in 2023 compared to 2022.
The change in cash flow from financing activities was primarily due to net borrowings of $100 million under the Revolver due 2029 and proceeds from the issuance of $500 million aggregate principal amount of 6.375% Senior Notes in 2024 and compared to cash used in 2023 to redeem the $172.5 million 1.00% Convertible Senior Notes due 2023, partially offset by the redemption of the $300 million 7.50% Senior Notes in 2024.
Operating Income. Operating income decreased $210.4 million, or 40%, to $321.1 million in 2023 from $531.5 million in 2022. Operating income for the manufacturing segment attributable to acquisitions completed in 2023 and 2022 was approximately $(0.6) million and $19.4 million, respectively. The decrease in operating income primarily reflects the decrease in gross profit mentioned above. Distribution Net Sales.
Manufacturing segment operating income increased $19.9 million, or 6%, to $341.0 million in 2024 compared to $321.1 million in 2023. Manufacturing segment operating income in 2024 attributable to acquisitions completed in such year was approximately $46.5 million and manufacturing segment operating loss in 2023 attributable to acquisitions completed in such year was $(0.6) million.
Manufactured Housing ("MH") Industry Net sales to the MH industry, which represented 16% of the Company’s consolidated net sales in 2023 , decreased 19% in 2023 compared to 2022. MH sales are generally correlated to MH industry wholesale unit shipments.
Net sales to the MH industry increased 20% during the year ended December 31, 2024 compared to 2023. MH sales are generally correlated to MH industry wholesale unit shipments.
As a percentage of net sales, gross profit was 21.8% in 2023 compared to 22.2% in 2022. 32 Gross profit margin decreased in 2023 compared to 2022 due to increases in labor and manufacturing overhead expense as a percentage of net sales primarily due to reduced sales volumes, partially offset by an improvement in material costs as a percentage of net sales.
The increase in gross profit as a percentage of sales in 2024 compared to 2023 is attributable to decreases in material and labor costs as a percentage of sales, partially offset by increased overhead costs as a percentage of sales. Operating Income.
Based on industry data from the Manufactured Housing Institute, MH wholesale industry unit shipments totaled 89,200 units in 2023 , a decrease of 21% compared to 2022 MH wholesale industry unit shipments of 112,900 units. Demand for MH units in 2023 was impacted by a decrease in housing affordability caused by elevated interest rates and higher raw material costs.
According to Company estimates based on industry data from the Manufactured Housing Institute, MH industry wholesale unit shipments totaled approximately 103,300 units in 2024, an increase of 16% compared to 89,200 units in 2023, primarily driven by OEMs increasing production from significantly reduced levels in 2023 in anticipation of a recovery in demand.
As of and for the reporting period ended December 31, 2023, the Company was in compliance with its financial covenants as required under the terms of its 2021 Credit Agreement.
The Company will continue to assess its liquidity position and potential sources of supplemental liquidity in view of operating performance, current economic and capital market conditions, and other relevant circumstances. 34 Table of Contents As of and for the reporting period ended December 31, 2024, the Company was in compliance with its financial covenants under the Company’s Fifth Amended and Restated Credit Agreement (the "2024 Credit Agreement").
In 2023 and 2022, net sales attributable to acquisitions completed in each of those periods was approximately $3.6 million and $121.3 million, respectively. Gross Profit. Gross profit decreased $241.7 million, or 30%, to $577.3 million in 2023 from $819.0 million in 2022.
In 2024 and 2023 , net sales attributable to acquisitions completed in each of those years was $295.7 million and $17.7 million , respectively. Cost of Goods Sold. Cost of goods sold increased $194.0 million, or 7%, to $2.88 billion in 2024 compared to $2.69 billion in 2023.
See “Information Concerning Forward-Looking Statements” on page 3 of this Report. 28 EXECUTIVE SUMMARY Overview of Markets and Related Industry Performance Recreational Vehicle ("RV") Industry The RV industry is our primary market and comprised 43% of the Company’s consolidated net sales in 2023 . Net sales to the RV industry decreased 42% in 2023 compared to 2022.
"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, 2023 filed with the SEC on February 29, 2024. 29 Table of Contents EXECUTIVE SUMMARY Overview of Markets and Related Industry Performance Recreational Vehicle ("RV") Industry The RV industry is our primary market and comprised 44% and 43% of the Company’s consolidated net sales for the years ended December 31, 2024 and 2023, respectively.
In 2023 and 2022 , net sales attributable to acquisitions completed in each of those years was $17.7 million and $121.8 million , respectively. The Company’s RV content per wholesale unit for 2023 decreased 9% to $4,800 from $5,257 in 2022. The Company's marine powerboat content per wholesale unit for 2023 decreased 5% to $4,803 from $5,032 in 2022.
Sales to the marine market decreased 29% compared to 2023, primarily attributable to a decrease in estimated powerboat wholesale unit shipments of 25%. Sales to the industrial market decreased 2% compared to 2023. For 2024 and 2023, manufacturing segment sales attributable to acquisitions completed in each of those years were $275.4 million and $3.6 million, respectively. Gross Profit.
The increase in SG&A expenses as a percentage of net sales is primarily a result of the fixed nature of certain other expenses such as wages, payroll taxes, stock compensation, and insurance, as well as an increase in software and technology expenses.
The increase in SG&A expenses as a percentage of net sales in 2024 compared to 2023 is primarily attributable to the Sportech acquisition-related costs, increased technology expenses and deferred financing costs write-off mentioned above, partially offset by decreased incentive compensation, wages and insurance expenses.
Year Ended December 31, ($ in thousands) 2023 2022 2021 Sales Manufacturing $ 2,653,257 $ 3,681,412 $ 3,002,107 Distribution $ 889,408 $ 1,287,597 $ 1,154,654 Gross Profit Manufacturing $ 577,284 $ 818,960 $ 598,942 Distribution $ 195,506 $ 254,886 $ 211,241 Operating Income Manufacturing $ 321,096 $ 531,547 $ 379,885 Distribution $ 90,095 $ 136,889 $ 106,241 Year Ended December 31, 2023 Compared to 2022 Manufacturing Net Sales.
Year Ended December 31, $ Change % Change ($ in thousands) 2024 2023 Sales Manufacturing $ 2,756,547 $ 2,653,257 $ 103,290 4% Distribution $ 980,127 $ 889,408 $ 90,719 10% Gross Profit Manufacturing $ 612,552 $ 577,284 $ 35,268 6% Distribution $ 224,855 $ 195,506 $ 29,349 15% Operating Income Manufacturing $ 340,961 $ 321,096 $ 19,865 6% Distribution $ 104,715 $ 90,095 $ 14,620 16% Year Ended December 31, 2024 Compared to 2023 Manufacturing Sales.
Removed
Estimated marine retail powerboat shipments totaled approximately 178,100 units in 2023 , a decrease of 5% compared to 2022 retail powerboat shipments of approximately 188,100 units, according to SSI as economic uncertainty and higher interest rates impacted demand.
Added
Patrick’s results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 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.
Removed
Combined new housing starts decreased 9% in 2023 compared to 2022, with single family housing starts decreasing 6% and multifamily residential starts decreasing 14% for the same period.
Added
Net sales to the RV industry increased 8% for the year ended December 31, 2024 compared to 2023.
Removed
Net sales in 2023 decreased approximately $1.41 billion, or 29%, to $3.47 billion from $4.88 billion in 2022.
Added
The decrease in net sales to the marine industry was in line with the decrease in wholesale powerboat unit shipments. Our marine revenue is generally correlated to marine wholesale powerboat unit shipments.
Removed
The decrease was attributable to a 42% decrease in net sales to our RV end market, a 11% decrease in net sales to our marine end market, a 19% decrease in net sales to our MH end market, and a 14% decrease in net sales to our industrial end market.
Added
Powersports Industry Through acquisitions completed in recent years, the Company entered the powersports end market. Previously, our sales to the powersports end market were included in the Company’s marine end market sales.
Removed
The Company's MH content per wholesale unit for 2023 increased 2% to $6,372 in 2023 from $6,243 in 2022. Cost of Goods Sold. Cost of goods sold decreased $1.14 billion, or 30%, to $2.69 billion in 2023 from $3.82 billion in 2022.
Added
Effective with the first quarter of 2024, powersports net sales are being reported separately after the January 2024 acquisition of Sportech, LLC (“Sportech”), as disclosed in Note 2 "Revenue Recognition" of the Notes to Consolidated Financial Statements included herein.
Removed
Cost of goods sold as a percentage of net sales decreased for 2023 compared to 2022 primarily as a result of (i) continued cost reduction and automation initiatives we deployed throughout 2022 and 2023 that positively impacted overall costs, (ii) improved labor efficiencies as a result of investment in human capital and improved retention rates, (iii) synergies and different cost profiles from acquisitions completed in 2023 and 2022 and (iv) changes in certain commodity prices, partially offset by reduced sales volumes resulting in less favorable fixed cost absorption when compared to the prior year periods.
Added
Net sales to the powersports industry comprised approximately 10% and 4% of the Company's consolidated net sales for the years ended December 31, 2024 and 2023, respectively. Net sales to the powersports industry increased 189% during the year ended December 31, 2024 compared to 2023.
Removed
The increase in interest expense is primarily attributable to the increase in interest rates on our debt subject to variable interest rates and the repayment of our 1.00% Convertible Senior Notes due 2023 (the “1.00% Convertible Notes”) in February 2023, with borrowings under our revolving credit facility (the "Revolver due 2027") which has a comparatively higher interest rate, partially offset by lower average debt levels compared to 2022.
Added
The increase in net sales for this period is primarily attributable to the Company's acquisition of Sportech in January 2024. Manufactured Housing ("MH") Industry Net sales to the MH industry comprised approximately 18% and 16% of the Company's consolidated net sales for the years ended December 31, 2024 and 2023, respectively.
Removed
The increase in the effective tax rate in 2023 was mostly attributable to an increased impact from stock compensation Section 162(m) permanent addback. See our Form 10-K for the year ended December 31, 2022 for a discussion of our consolidated operating results for the year ended December 31, 2022 compared to 2021.
Added
Net sales to the industrial market decreased 1% during the year ended December 31, 2024 compared to 2023. Overall, our revenues in these markets are focused on residential and multifamily housing, hospitality, high-rise housing and office, 30 Table of Contents commercial construction and institutional furniture markets.
Removed
Use of Financial Metrics Our MD&A includes financial metrics, such as RV, marine and MH content per unit, which we believe are important measures of the Company's business performance. Content per unit metrics are generally calculated using our market sales divided by Company estimates of industry unit volume, which are derived from third-party industry data.
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During the year ended December 31, 2024, combined new housing starts decreased 4% compared to 2023, reflecting a decrease in multifamily housing starts of 25%, partially offset by an increase in single-family housing starts of 6%.
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These metrics should not be considered alternatives to accounting principles generally accepted in the United States of America ("U.S. GAAP"). Our computations of content per unit may differ from similarly titled measures used by others. These metrics should not be considered in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP.
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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, 2024 and 2023.
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The Company does not measure profitability at the end market (RV, marine, MH and industrial) level. 31 • Manufacturing – This segment includes the following products: laminated products that are utilized to produce furniture, shelving, walls, countertops and cabinet products; cabinet doors; fiberglass bath fixtures and tile systems; hardwood furniture; vinyl printing; RV and marine furniture; audio systems and accessories, including amplifiers, tower speakers, soundbars, and subwoofers; decorative vinyl and paper laminated panels; solid surface, granite, and quartz countertop fabrication; RV painting; fabricated aluminum products; fiberglass and plastic components; fiberglass bath fixtures and tile systems; softwoods lumber; custom cabinetry; polymer-based and other flooring; electrical systems components including instrument and dash panels; wrapped vinyl, paper and hardwood profile mouldings; interior passage doors; air handling products; slide-out trim and fascia; thermoformed shower surrounds; specialty bath and closet building products; fiberglass and plastic helm systems and components products; treated, untreated and laminated plywood; wiring and wire harnesses; adhesives and sealants; boat towers, tops, trailers and frames; marine hardware and accessories; protective covers for boats, RVs, aircraft, and military and industrial equipment; aluminum and plastic fuel tanks; CNC molds and composite parts; slotwall panels and components; and other products. • Distribution – This segment includes the distribution of pre-finished wall and ceiling panels; drywall and drywall finishing products; electronics and audio systems components; appliances; marine accessories and components; wiring, electrical and plumbing products; fiber reinforced polyester products; cement siding; raw and processed lumber; interior passage doors; roofing products; laminate and ceramic flooring; tile; shower doors; furniture; fireplaces and surrounds; interior and exterior lighting products; and other miscellaneous products in addition to providing transportation and logistics services.
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Net sales in 2024 increased approximately $247.6 million, or 7%, to $3.72 billion compared to $3.47 billion in 2023. Net sales in 2024 increased due to increased sales to the powersports, RV and MH markets, partially offset by decreased sales to the marine and industrial markets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe do not believe that commodity price volatility had a material effect on results of operations for the periods presented. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is set forth in Item 15(a)(1) of Part IV of this Annual Report on Form 10-K. ITEM 9.
Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is set forth in Item 15(a)(1) of Part IV of this Annual Report on Form 10-K.
Prices of certain commodities have historically been volatile and continued to fluctuate in 2023. During periods of volatile commodity prices, we have generally been able to pass both price increases and decreases to our customers in the form of price adjustments.
Prices of certain commodities have historically been volatile and continued to fluctuate in 2024. During periods of volatile commodity prices, we have generally been able to pass both price increases and decreases to our customers in the form of price adjustments.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Debt Obligations As of December 31, 2023, our total debt obligations under our 2021 Credit Agreement were under Secured Overnight Financing Rate Data ("SOFR")-based interest rates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Debt Obligations As of December 31, 2024, our total debt obligations under our 2024 Credit Agreement were under Secured Overnight Financing Rate Data ("SOFR")-based interest rates.
A 100-basis point increase in the underlying SOFR rates would result in additional annual interest cost of approximately $1.3 million, assuming average borrowings during 2023, including the Term Loan due 2027, subject to variable rates were equal to the amount of such borrowings outstanding as of December 31, 2023, or $129.4 million, excluding deferred financing costs related to the Term Loan due 2027.
A 100-basis point increase in the underlying SOFR rates would result in additional annual interest cost of approximately $2.2 million, assuming average borrowings during 2024, including the Revolver due 2029 and Term Loan due 2029, subject to variable rates were equal to the amount of such borrowings outstanding as of December 31, 2024, or $223.4 million, excluding deferred financing costs related to the Revolver due 2029 and Term Loan due 2029.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
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We do not believe that commodity price volatility had a material effect on results of operations for the periods presented. Equity Price Risk The fair value of the 1.75% Convertible Notes is subject to market risk and other factors due to the conditional conversion feature.
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The fair value of the 1.75% Convertible Notes will generally increase as our common stock price increases and will generally decrease as our common stock price decreases. The 1.75% Convertible Notes are carried at amortized cost and their fair value is presented for disclosure purposes only.
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The Company will satisfy any conversion by paying cash up to the aggregate principal amount of the 1.75% Convertible Notes to be converted and by paying or delivering, as the case may be, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at its election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the 1.75% Convertible Notes being converted.
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In connection with the pricing of the 1.75% Convertible Notes, we entered into convertible note hedge transactions with certain of the initial purchasers and/or their respective affiliates (the “option counterparties”). At the same time, we entered into warrant transactions with the option counterparties.
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The convertible note hedge transactions are expected generally to reduce the potential dilution upon conversion of the 1.75% Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be.
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However, the warrant transactions could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the warrants. See Note 9 "Derivative Financial Instruments" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for further discussion. ITEM 8.

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