PATK

Patrick is a diversified supplier to RV (45% of sales), manufactured housing (17%), marine (15%) and powersports (10%) — all deeply cyclical OEM end markets. FY2025 shows a business grinding through a recovery: revenue grew 6.3% to $3.95B, gross profit rose a strong 9.2% to $913M and operating income gained 7.0% to $276M, so the core operations are getting healthier and gross margin (23.1%) is expanding. The MD&A confirms the cyclical backdrop is mending — RV wholesale shipments +3%, RV net sales +9%, powersports +9% — even as retail demand stays soft (RV retail -2%, marine retail -8%) and dealers keep normalizing inventory.

The problem sits below the operating line. Net income fell 2.4% to $135M and diluted EPS dropped 5.1% to $3.90, the third consecutive year of flat-to-lower earnings (FY2022 $328M → FY2023 $143M → FY2024 $138M → FY2025 $135M) even as revenue has rebuilt off the 2023 trough. Net margin has compressed to just 3.4%, and the gap between healthy operating income and stagnant net income points to interest drag from a leveraged, acquisition-built balance sheet: $1.28B long-term debt against $1.18B equity (1.60x liabilities/equity) and only $26.4M cash, which itself fell 21%. ROE of 11.4% is unremarkable for the risk. The 2024 Credit Agreement secures most owned real property, underscoring how levered the model is.