Patrick Industries Annual Report 2023

Plain-text annual report

Annual Report 2023 RV MARINE POWERSPORTS HOUSING Selected Financial Data Net sales Gross proﬁt Warehouse & delivery expenses Selling, general & administrative expenses Operating income Net income Diluted net income per common share (thousands except per share amounts) 2023 2022 2021 $3,468,045 $4,881,872 $4,078,092 782,233 143,921 299,418 260,200 142,897 6.50 1,059,938 163,026 327,513 496,170 328,196 13.49 801,194 139,606 253,547 351,712 224,915 9.63 Proforma adjusted EBITDA (1) 431,008 673,596 530,774 Total assets Total debt Shareholders’ equity Net cash provided by operating activities Cash dividends paid per common share (1) Proforma adjusted EBITDA is a non-GAAP ﬁnancial measure. 2,562,448 2,782,471 2,650,731 1,038,125 1,298,414 1,360,625 1,045,337 408,672 1.90 955,169 411,738 1.44 767,557 252,130 1.17 Investor Information Net Sales ($ Millions) Net Income ($ Millions) 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 $3,468 $143 Diluted Net Income per Common Share 2019 2020 2021 2022 2023 $6.50 Working Capital ($ Millions) Stock Price At December 31st Operating Cash Flows 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 $471 Annual Report • 2023 ($ Millions) 2019 2020 2021 2022 2023 $100.35 $409 Dear Shareholder (cid:1)(cid:287)(cid:647)(cid:319)(cid:202)(cid:647)(cid:283)(cid:202)(cid:340)(cid:202)(cid:192)(cid:294)(cid:647)(cid:257)(cid:251)(cid:647)(cid:294)(cid:226)(cid:202)(cid:647)(cid:280)(cid:168)(cid:287)(cid:294)(cid:647)(cid:325)(cid:202)(cid:168)(cid:283)(cid:586)(cid:647)(cid:319)(cid:202)(cid:647)(cid:283)(cid:202)(cid:192)(cid:257)(cid:221)(cid:251)(cid:229)(cid:333)(cid:202)(cid:647)(cid:543)(cid:541)(cid:543)(cid:544)(cid:647)(cid:168)(cid:287)(cid:647)(cid:168)(cid:647)(cid:325)(cid:202)(cid:168)(cid:283)(cid:647)(cid:257)(cid:220)(cid:647)(cid:287)(cid:294)(cid:283)(cid:202)(cid:251)(cid:221)(cid:294)(cid:226)(cid:586)(cid:647) (cid:283)(cid:202)(cid:287)(cid:229)(cid:245)(cid:229)(cid:202)(cid:251)(cid:192)(cid:202)(cid:586)(cid:647)(cid:168)(cid:251)(cid:198)(cid:647)(cid:287)(cid:257)(cid:245)(cid:229)(cid:198)(cid:647)(cid:283)(cid:202)(cid:287)(cid:299)(cid:245)(cid:294)(cid:287)(cid:585)(cid:647)(cid:125)(cid:226)(cid:202)(cid:647)(cid:325)(cid:202)(cid:168)(cid:283)(cid:647)(cid:319)(cid:168)(cid:287)(cid:647)(cid:251)(cid:257)(cid:294)(cid:647)(cid:319)(cid:229)(cid:294)(cid:226)(cid:257)(cid:299)(cid:294)(cid:647)(cid:229)(cid:294)(cid:287)(cid:647)(cid:192)(cid:226)(cid:168)(cid:245)(cid:245)(cid:202)(cid:251)(cid:221)(cid:202)(cid:287)(cid:586)(cid:647)(cid:325)(cid:202)(cid:294)(cid:647) (cid:294)(cid:226)(cid:202)(cid:647)(cid:299)(cid:251)(cid:319)(cid:168)(cid:318)(cid:202)(cid:283)(cid:229)(cid:251)(cid:221)(cid:647)(cid:198)(cid:202)(cid:198)(cid:229)(cid:192)(cid:168)(cid:294)(cid:229)(cid:257)(cid:251)(cid:647)(cid:257)(cid:220)(cid:647)(cid:257)(cid:299)(cid:283)(cid:647)(cid:294)(cid:202)(cid:168)(cid:250)(cid:647)(cid:250)(cid:202)(cid:250)(cid:191)(cid:202)(cid:283)(cid:287)(cid:647)(cid:226)(cid:202)(cid:245)(cid:280)(cid:202)(cid:198)(cid:647)(cid:198)(cid:202)(cid:245)(cid:229)(cid:318)(cid:202)(cid:283)(cid:647)(cid:168)(cid:647)(cid:287)(cid:294)(cid:283)(cid:257)(cid:251)(cid:221)(cid:647) (cid:280)(cid:202)(cid:283)(cid:220)(cid:257)(cid:283)(cid:250)(cid:168)(cid:251)(cid:192)(cid:202)(cid:647)(cid:229)(cid:251)(cid:647)(cid:294)(cid:226)(cid:202)(cid:647)(cid:220)(cid:168)(cid:192)(cid:202)(cid:647)(cid:257)(cid:220)(cid:647)(cid:299)(cid:251)(cid:192)(cid:202)(cid:283)(cid:294)(cid:168)(cid:229)(cid:251)(cid:294)(cid:325)(cid:585)(cid:647)(cid:125)(cid:257)(cid:647)(cid:202)(cid:318)(cid:202)(cid:283)(cid:325)(cid:647)(cid:229)(cid:251)(cid:198)(cid:229)(cid:318)(cid:229)(cid:198)(cid:299)(cid:168)(cid:245)(cid:647)(cid:319)(cid:226)(cid:257)(cid:647)(cid:192)(cid:257)(cid:251)(cid:294)(cid:283)(cid:229)(cid:191)(cid:299)(cid:294)(cid:202)(cid:198) (cid:294)(cid:257)(cid:647)(cid:257)(cid:299)(cid:283)(cid:647)(cid:287)(cid:299)(cid:192)(cid:192)(cid:202)(cid:287)(cid:287)(cid:647)(cid:294)(cid:226)(cid:229)(cid:287)(cid:647)(cid:325)(cid:202)(cid:168)(cid:283)(cid:586)(cid:647)(cid:61)(cid:647)(cid:202)(cid:324)(cid:294)(cid:202)(cid:251)(cid:198)(cid:647)(cid:250)(cid:325)(cid:647)(cid:168)(cid:280)(cid:280)(cid:283)(cid:202)(cid:192)(cid:229)(cid:168)(cid:294)(cid:229)(cid:257)(cid:251)(cid:647)(cid:168)(cid:251)(cid:198)(cid:647)(cid:168)(cid:198)(cid:250)(cid:229)(cid:283)(cid:168)(cid:294)(cid:229)(cid:257)(cid:251)(cid:585)(cid:647)(cid:647) Against a dynamic macroeconomic background our Company achieved record gross margin and free cash ﬂow — a testament to the strength and efficiency of our team and the ﬂexibility of our operations. In 2023, we continued to prepare our Company for future proﬁtable growth, including the strategic acquisition of Patrick Marine Transport, and optimizing our balance sheet and capital structure to welcome Sportech to the Patrick family in early 2024. With our largest acquisition to date in early 2024, we have enhanced our Full Solutions Model to further exemplify excellence from customer service to design and delivery. We focused on investing in our people and our business, laying the groundwork to accelerate our transformation ahead. • • Solution-based Innovation: Our Advanced Product Group unites two centers of excellence, engineering and innovation, to accelerate collaborative product development with OEMs. Strategic Diversiﬁcation: The past few years have shown the resilience of our increasingly diversiﬁed portfolio, enabling us to thrive in an ever-changing economic environment and setting the stage for further expansion in the Outdoor Enthusiast markets. • Investing in Our People: Our team members are our greatest asset, and we’ve taken our investment in their growth and development to a new level to ensure we continue to attract and retain top talent. • Diligent Financial Management: We have maintained a disciplined capital allocation strategy, bolstering our resilience and clearing the path to future proﬁtable growth. As we move forward, we will continue to assess the impact of economic shifts on consumer behavior. We are conﬁdent in the bench strength of our team and our agility which enables us to seize strategic opportunities and drive shareholder value. Looking ahead, we aim to cement our role as the supplier of choice to the Outdoor Enthusiast markets. The great outdoors is not just a destination; it is a place where passions are discovered, bonds are built, and community is created. Our commitment to empowering enthusiasts remains steadfast. Together, we will embrace the challenges and harness the opportunities that lie ahead, reinforcing our pledge to deliver value to you, our shareholders, and to the communities we serve. Andy L. Nemeth Chief Executive Officer 2023 Highlights FREE CASH FLOW (cid:88)(cid:111)(cid:35)(cid:114)(cid:1)(cid:125)(cid:61)(cid:82)(cid:53)(cid:647) CASH FLOW (cid:76)(cid:61)(cid:113)(cid:130)(cid:61)(cid:31)(cid:61)(cid:125) (cid:156) Annual Report • 2023 • Achieved record gross margin and generated free cash ﬂow (non-GAAP ﬁnancial measure) of $350 million. • Generated $409 million in operating cash ﬂows, reinforcing our strong liquidity position of $780 million and empowering us to take strategic advantage of opportunities while continuing to return cash to shareholders. • Maintained a strong balance sheet that included a $260 million repayment of debt and a $158 million inventory reduction, further strengthening our ﬁnancial ﬂexibility. • Returned $61 million to shareholders in the form of stock repurchases and dividends; our Board increased our dividend to $0.55 per share. • Launched Patrick’s Advanced Product Group, exemplifying our dedication to solution- based innovation by uniting engineering and innovation teams to accelerate product development and enhance collaboration with OEM partners. • Patrick’s philanthropic efforts have delivered transformative experiences to thousands of people, from the achievement of home ownership, to experiencing the healing power of the outdoors. (cid:111)(cid:1)(cid:61)(cid:31)(cid:647)(cid:31)(cid:88)(cid:150)(cid:82) (cid:647)(cid:31)(cid:35)(cid:24)(cid:125) (cid:114)(cid:35)(cid:31)(cid:130)(cid:25)(cid:35)(cid:31)(cid:647) (cid:61)(cid:82)(cid:149)(cid:35)(cid:82)(cid:125)(cid:88)(cid:114)(cid:156)(cid:647)(cid:24)(cid:156) (cid:118)(cid:125)(cid:114)(cid:1)(cid:125)(cid:35)(cid:53)(cid:61)(cid:25)(cid:647) (cid:25)(cid:1)(cid:111)(cid:61)(cid:125)(cid:1)(cid:76)(cid:647) (cid:1)(cid:76)(cid:76)(cid:88) (cid:25)(cid:1)(cid:125)(cid:61)(cid:88)(cid:82)(cid:118) TO ACQUISITIONS, CAPEX, STOCK REPURCHASES, AND DIVIDENDS TO SHAREHOLDERS RV MARINE HOUSING Annual Report • 2023 End Market Insights Patrick Industries proactively and successfully navigated a challenging landscape across its core end markets with resilience throughout 2023. The Patrick team ﬂexed its business model and cost structure supporting its RV OEM customers as they worked with dealers to manage ﬁeld inventory levels and appropriately align production with the retail environment. These efforts leave the industry in a healthier position and we remain poised to beneﬁt once retail demand improves and normalization begins. Our marine business performed as intended, remaining positive as our RV market turned down, but did face cyclical pressures as the year progressed. Once again, our team managed nimbly and effectively, proactively making tough decisions and ﬂexing the business to reﬂect end market dynamics. We continue to focus on providing customers service and value through our line of highly engineered products and believe ﬁeld inventory is appropriate. The demand for affordable housing remains a long-term tailwind for Patrick. As consumers grapple with higher interest rates and inﬂation, we believe manufactured and site-built housing markets in the U.S. have signiﬁcant runway for future growth. Advancing Sustainability and Responsibility In our commitment to sustainability, we have focused on three core pillars: Empowering People, Caring for Our Planet, and Living by Our Policies. Our Empowerment initiatives have cultivated a culture of safety, wellness, and professional growth, leading to a notable 36% reduction in the Total Recordable Incident Rate and 42% of our business units achieving zero recordables as of September 2023. Our holistic approach to Leadership and Cultural development is making a meaningful impact at all levels of our organization. Our TACTical Leadership Training saw a 43% increase in participation and a 31% rise in completed training hours from 2022 to 2023. Similarly, the BETTER Together Training has strenghtened our culture of collaborative growth and servant leadership, with marked increases in both team members trained and business units impacted. Our commitment to the planet is reﬂected in our efficient resource management and waste reduction efforts, achieving a 60% total waste recycling rate, a testament to our dedication to environmental stewardship. Living by our policies, we adhere to strict ethical business practices, underlined by a Code of Ethics for Directors, Officers, and Employees, and Corporate Governance Guidelines that ensure accountability, transparency, and the protection of Company assets. Our Board composition highlights our commitment to diversity and expertise, with 33% representing gender or racial/ethnic diversity. These efforts collectively underscore our dedication to not just meeting but exceeding standards, fostering a sustainable future for our stakeholders and the planet. Fortifying our (cid:31)(cid:229)(cid:318)(cid:202)(cid:283)(cid:287)(cid:229)(cid:339)(cid:192)(cid:168)(cid:294)(cid:229)(cid:257)(cid:251)(cid:647) Strategy and Allocating Capital Patrick remains committed to strategic investments and expansion initiatives. In 2023, we invested $59 million in capital expenditures, with a focus on automation, product development, and IT enhancements. Looking ahead to 2024, we anticipate allocating another $70 million to $80 million in capital investments to further enhance our capabilities and fuel growth. Concurrently, we continue to be actively engaged in M&A, keeping a full pipeline that features high-quality targets led by strong leadership teams in the Outdoor Enthusiast space. Our interest in expanding into aftermarket and adjacent market categories persists, and with ample liquidity, we are prepared to make value enhancing acquisitions that align seamlessly with our strategic vision and contribute to sustained success. 85+ BRANDS Empowered by (cid:25) (cid:88) (cid:81) (cid:81) (cid:61) (cid:125) (cid:125) (cid:35) (cid:31) (cid:647) (cid:125) (cid:88) (cid:647) (cid:125) (cid:58) (cid:35) (cid:647) (cid:58) (cid:61) (cid:53) (cid:58) (cid:35)(cid:118) (cid:125) (cid:647) (cid:118) (cid:125)(cid:1) (cid:82) (cid:31)(cid:1) (cid:114) (cid:31) (cid:118) (cid:647) (cid:88) (cid:52)(cid:647) (cid:113) (cid:130)(cid:1) (cid:76) (cid:61) (cid:125) (cid:156)(cid:586) (cid:647) (cid:25) (cid:130) (cid:118) (cid:125) (cid:88) (cid:81) (cid:35) (cid:114) (cid:647) (cid:118) (cid:35) (cid:114) (cid:149) (cid:61) (cid:25) (cid:35) (cid:586) (cid:647) (cid:1) (cid:82) (cid:31) (cid:647) (cid:61) (cid:82) (cid:82) (cid:88)(cid:149)(cid:1)(cid:125) (cid:61) (cid:88) (cid:82) Annual Report • 2023 Intrinsic Value Patrick successfully navigated short-term challenges with a clear focus on long-term value creation, ﬁnancial stability, and strategic growth. The market’s acknowledgement of our intrinsic value reﬂects conﬁdence in our strategic direction, ﬁnancial resilience, and growth potential. We are successfully raising Patrick’s proﬁle by spotlighting the achievements of our 85+ leading brands, Empowered by Patrick. Our performance is a testament to the trust our investors place in our vision and our team’s ability to execute that vision, driving sustainable growth and proﬁtability. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2023 or ☐ TRANSRR ITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period froff m ……………… to ……………… Commission file number 000-03922 PATRICK INDUSTRIES, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpor ation or organization) Indiana rr 107 W. Franklin St. Elkhart, Indiana (Address of principal executive officff es) 35-1057796 (I.R.S. Employer Identificff ation No.) 46516 (Zip Code) Registrant’s telephone number, including area code: (574) 294-7511 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common stock, without par value PATK Nasdaq Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as definff ed in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to fileff reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forff such reports), and (2) has been subju ect to such filing requirements forff such shorter period that the registrant was required to fileff the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to such shorter period that the registrant was Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or forff required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. r ☐ Smaller reporting company ☐ Emerging growth company ☐ Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated fileff If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period forff with any new or revised finff ancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ d a report on and attestation to its management’s assessment of the effeff ctiveness of its Indicate by check mark whether the registrant has fileff internal control over finff ancial reporting under Section 404(b) of the Sarbar nes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firff m that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers durd ing the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in RulRR e 12b-2 of the Act). Yes ☐ No ☒ As of June 30, 2023, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the common stock of the registrant held by non-affiff liates was $1.7 billion. As of Februarr ry 16, 2024, there were 22,382,306 shares of the registrant’s common stock outstanding. complying Portions of the registrant’s Proxy Statement forff reference into Part III of this Form 10-K. its Annual Meeting of Shareholders to be held on May 16, 2024 are incorpor rr ated by DOCUMENTS INCORPORATRR ED BY REFERENCE PATRICK INDUSTRIES, INC. FORM 10-K FISCAL YEAR ENDED DECEMBER 31, 2023 Table of Contents PART I ITEM 1. BUSINESS ITEM 1A. RISK FACTORS ITEM 1B. UNRUU ESOLVED STAFF COMMENTS ITEM 1C. CYBERSECURITY ITEM 2. PROPERTIES ITEM 3. LEGAL PROCEEDINGS ITEM 4. MINE SAFETY DISCLOSURES PART II ITEM 5. MARKET FOR REGISTRANT RR ISSUER PURCHASES OF EQUITY SECURITIES ’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ITEM 6. RESERVED ITEM 7. AA MANAGE OPERATIONS MENT’S DISCUSSION AND ANALAA YSIS OF FINANCIAL CONDITION AND RESULTS OF ITEM 7A. QUANTAA ITATIVE ANDAA QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ITEM 9. CHANGES IN ANDAA DISCLOSURE DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDAA FINANCIAL ITEM 9A. CONTROLS AND PROCEDURES ITEM 9B. OTHER INFORMATION ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATRR E GOVERNANCE ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNEWW RSHIP OF CERTAIN BENEFICIAL OWNEWW RS AND MANAGE STOCKHOLDER MATTERS AA MENT AND RELATED ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANRR SACTIONS, ANDAA DIRECTOR INDEPENDENCE ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES ITEM 16. FORM 10-K SUMMARY SIGNATURES Index to Financial Statements and Financial Statement Scheduldd es Report of Independent Registered Publu ic Accounting Firm, Deloitte & Touche LLP FINANCIAL SECTION Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Shareholders’ Equity Notes to Consolidated Financial Statements 2 4 4 13 25 25 26 26 26 26 26 28 28 36 36 36 36 37 37 38 38 38 38 38 38 39 39 41 42 F-1 F-2 F-4 F-5 F-6 F-7 F-8 F-9 INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS ooki gng statements” wi hith respect to fifinanciiall c di ondi ition, resullts hThiis Annuall Report on Form 10-K cont iains certaiin “forff wa drd l-l ki rowthh a dnd projojectiions, of opera itions b, busiiness strat gegiies, opera itingg effiffi icien icies or ysyne grgiies, competi iitive posi iition, iinddustry gy grr ggrow hth opportu ini ities forff exiis iti gng pr doducts, pllans andd objbjectiives of managgement, markkets for thhe common sto kck of Patriickk Inddustriies, Inc. ((thhe “Compa yny” or “Pat iri kck )”) andd o hther matters. Statements iin hthiis Form 10-K as w lelll as o hther statements iwi hth hthe Secu iri ities a dnd Ex hchangge Commiis ision cont iained id in thhe annuall report a dnd statements cont iained id in futff urt e filiilinff ((“SEC”)) a dnd be byy managgement of hthe Compa yny iin presenta itions, whihi hch are not hihistoriic lal facts, are man gagement’s current expectatiions andd bebeliliefs regga drdiingg futff urt e a dnd an iticiipat ded ddevellopments andd thheiir iimpact on Patriickk, and id i hnherentlyly iin lvolve iri ksks a dnd uncertaiin ities thhat c louldd cause actu lal resullts to didiffer materiiallylly from hthose set forth ih in thhe forwardd-llo kioki gng statements. publiiclyly didisse iminat ded press r leleases, a dnd statements hwhiichh m yay bbe madde from tiime to itime iin hthe futff urt ggs bl hThere are a numbber of facff events to didiffer materiiallllyy froff m thhos de describib ded iin hthe forff wa drd l-l ki ididen iftifiiefff d id in thhe “Riiskk Factors” sectiion of thihis Form 10-K as set forth ih in Part I, Item 1A, and id inclludde, wi hithout li ooki gng statements. Manyy, bbut not dond hthe controll of thhe Companyy, tors, manyy of whihi hch ar be b yey hwhiichh c louldd cause actuat i lalll, of hthese facff limitatiion: ll res lults andd tors are r; rr dnd ma krkets; • • • • • • • • • • • • • • • • • • • • ev lels effectiiv lelyy, as wellll as iinventory ly l hnol gyogy performance andd cybeyber-rellatedd riiskks; hth ie impact of anyy economiic ddownturt ns on our priimaryy err da d lecliin ie i dn diiscretiiona yry consumer spendidi gng; ppriiciingg pressures ddue to competi iition; costs a dnd av iaillabibia lilityy of raw mate iri lals a dnd comm diodi ities; iinflflatiiona yry pressure on our didirect and id i dindirect costs, iits iimpact to our customers, and id its iimpact to hthe e dnd consumer; hth ie imposi iition of rest irictiions andd taxes on iimports of raw materiialls andd components used id in our pr doducts; iinformatiion tech l hthe availilabibia lili yty of commerciiall credidit; hthe availilabibia lili yty of retailil andd wh lholes lale fiinff an ici gng for recreatiionall v hehiiclles, watercraft, a dnd re isiddentiiall a dnd manufacff hhomes; hthe availilabibia lili yty andd costs of llabboa hthe abibia litylity to managge our iinventory ly l hthe fiinff an ici lal co dindi ition of our customers; retentiion a dnd concentratiion of materiiall customers; hthe abibia litylity to ggenerate ca hsh flflow or bobt iain fiinff an ici gng to fu dnd ggrow hth; future ggrow hth rate is in thhe Companyy's cor be busiinesses; hthe seasonalili yty andd cyyclilic laliity iy in thhe iinddustriies to whihi hch our pr doducts are s loldd; re laliizatiion a dnd iimpact of effififf hthe successf lulff iincreases iin iinterest rates a dnd ioill a dnd ggasoliline p irices; iincreases/d/decreases iin hthe v lalue of fifinanciiall assets, whihi hch mayy affect didiscre itiona yry spendidi gng iin iinddustriies to whihi hch our ppr doducts are s loldd; hthe abibia litylity to retaiin kkeyy man gagement personnell; dadverse weathher c di our babilityility to remaiin iin compliliance wi hith our cr dediit gagreement covenants; hth ie impact of anyy pandde imic or o hther na itionall a dnd regigionall economiic, markket a dnd • • • • • You sh hthe reports and dd documents hthat hthe Compa yny fifilles wiithh thhe SEC, iin lcl diudi gng hthiis Annuall Report on Form 10-K forff endded Dd ecember 31, 2023. houldd considider forwardd-llo kioki gng statements, thherefore i, i iinteggratiion of acq iui isi itions andd o hther ggrow hth iini iitiatiives; icien ycy iimprovements a dnd cost redduc itions; ondi itions iimpactiingg ret iaill s lales; ev lels of ret iaillers andd manufact lpoliitiic lal co dindi itions. ln ligighht of va irious iimportant factors, iin lcl diudi gng hthose set forth ih in hth ye year publiic hhe lal hth emerggencyy on thhe economyy, our endd markkets andd our opera itions, a dnd; urt ers; turedd bl ff rr l hThese a dnd othher riiskks andd uncertaiin ities are didiscussedd more f lulff lyly at Part I, Item 1A “Riiskk Factors.” Anyy projejeo ctiions of fifinanciiall performance or statements concer ini gng expectatiions as to future ddevellopments hsh construer d id in a yny manner as a gguarantee hthat su hch resullts or ddevellopments anyy forff wa drd l-l ki ooki gng statement willill bbe re laliiz ded or hthat actuat forwardd-llo kioki gng statement. hThe Compa yny ddoes not andd spe icififi statements cont iained id in thihis Annuall Report on Form 10-K or to reflleff ct anyy chha gnge iin our expectatiions afteff Annuall Report on Form 10-K or a yny hchangge is in events, co dindi itions or as re louldd not bbe iwillll, iin fact, occur. hThere can bbe no assurance thhat iwillll not bbe mate iri lallyly didifferent from thhat set forth ih in suchh ooki gng statements, ooki gng r thhe ddate of hthiis hwhiichh a yny statemen it i bs bas ded, except lcallyly didiscllaiims anyy oblbligigatiion or u dndert kakiingg t do diisse iminate a yny ll res lults dundert kake to p blubliiclyly dupdates or reviisiions to anyy forff wa drd l-l ki dupdate or re ivise anyy forff wa drd l-l ki icircumstances on iquired bd by ly law. 3 ITEM 1. BUSINESS PART I Unless the context othett and its subsidiaries. rwise requires, the terms “Company,yy ” “Patrick,” “we,” “our,r ” or “us” refee r to Patritt ck Industries, Inc. Company Overview p y Patrick is a leading component solutions provider forff urt ed housing ("MH") and various industrial markets – including single and multi-family housing, hospitality, institutional and commercial markets. the recreational vehicle ("RV"), marine, manufact ff turing plants and The Company operates through a nationwide network that includes, as of December 31, 2023, 179 manufacff lities located in 23 states, with a small presence in Mexico, China and Canada. The 62 warehouse and distribution faci ff turing and Distribution, through a nationwide network of Company operates within two reportabla e segments, Manufacff ime and cost to the regional rr manufact ing and Distribution segments accounted for 75% and 25%, manufact respectively, of the Company’s consolidated net sales for 2023. Financial inforff mation about these operating segments is included in Note 16 "Segment Inforff mation" 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. ing and distribution centers for its producd ts, thereby reducing in-transit delivery t ff ing foot int of its customers. The Manufact urt urt prt urt ff ff a ff The Company’s capital allocation strategy is to optimally manage and utilize its resources and leverage its platform of operating brands to continue to grow, reinvest in its business, and returt n capital to shareholders. Through strategic in infrastructurt e and capital acquisitions, expansion both geographically and into new product expenditures, Patrick seeks to ensure that its operating network contains capacity, technology and innovative thought processes to support anticipated growth needs, effeff ctively respond to changes in market conditions, inventory a nd sales levels, and successfulff ing, distribution and administrative func lines and investment ly integrate manufact tions. urt ff ff rr 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. Patrick believes that returt ning capital to shareholders is an important part of its capital allocation strategy, and durd ing 2023 we returned $61 million to shareholders through our regular quarterly dividend and opportunistic share repurchases. The Company was incorpor ated in 1959 in Indiana. 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 p rr 4 Majoa r Product Lines j Patrick manufacff tures and distributes a variety of products within its reportabla e segments including: turing Manufacff Laminated products for furff niture, shelving, walls and countertops Decorative vinyl, wrappe vinyl printing a d vinyl, paper laminated panels and Distribution Pre-finished wall and ceiling panels Drywrr all and drywrr all finff ishing products Solid surface, granite and quartz countertops Interior and exterior lighting products Fabra icated aluminum products Wrapped vinyl, paper and hardwood profileff mouldings Electrical systems components including instrument and dash panels Slide-out trim and fasff cia Wiring, electrical and plumbing products Transportation and logistics services Electronics and audio systems components Cement siding rr Cabia net products, doors, components and custom cabia netry R aw and processed lumber Hardwood furniture Fiberglass bath fixturt es and tile systems Fiber reinforff ced polyester (“FRP”) products Interior passage doors Specialty bath and closet building products Roofinff g products Boat towers, tops, trailers, and fraff mes Laminate and ceramic flooring Shower doors Fireplaces and surrounds Appliances Tile Marine hardware and accessories Other miscellaneous products Softwoods lumber Interior passage doors Wiring and wire harnesses CNC molds and composite parts Aluminum and plastic fuel tanks Slotwall panels and components 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 furff niture Adhesives and sealants Audio systems and accessories, including amplifieff speakers, soundbars, and subwu Marine non-slip foam flooring, padding, and accessories Protective covers for boats, RVsRR , aircraft,ff and military arr industrial equipment Other miscellaneous products oofers nd rs, tower 5 y Primary Markets Patrick manufacff strategically located in proximity to the customers they serve. The Company’s net sales by market are as follows: tures and distributes its products for four nd markets. Our operating faci lities generally are primary err ff ff RV Marine MH Industrial Total Recreational VehVV icles 2023 2022 43 % 27 % 16 % 14 % 100 % 53 % 21 % 15 % 11 % 100 % roducts are sold primarily to majoa r manufact The Company’s RV pRR turers urt ers in adjacent industries. The principal types of recreational vehicles include (1) ("OEMs"), and to a lesser extent, manufact towabla es: conventional travel trailers, fifff thff wheels, folff ding camping trailers, and trucr k campers; and (2) motorized: class A (large motor homes), class B (van campers), and class C (small-to-mid size motor homes). The RV mRR arket is primarily dominated by Thor Industries, Inc. (“Thor”), Forest River, Inc. (“Forest River”) and Winnebago Industries, Inc. towabla es andd 83% for motorized units for ("Winnebago") which combined held approximately 86% of retail market share forff 2023 as reported per Statistical Surveys, Inc. ("SSI"). urt ers of RVsRR , smaller original equipment manufacff ff ff tyle. As more people see the benefitsff We believe there has been subsu tantial growth over the past several years in the consumer’s affiff nity for the Outdoor Enthusiast of enjon ying the outdoors with families and friends, there should be a positive impact lifesff arket. We also are optimistic about the near-term outlook for the RV market, which we on long-term demand in the RV mR eclines in OEM production in late 2022 and 2023 as a result of decreased believe bottomed in 2023 afteff evels are currently well below retail demand and dealer inventory r pace continues to be historical norms and will need to be replenished when retail demand recovers. Our strategy in the RV sRR io of products to OEMs through centered around our goal of providing best-in-class customer service and a growing portfolff our full solutions model, thereforff e helping our customers innovate and build quality units across the spectrum of feat urt e and price. educd tions. Our analysis suggests that dealer inventory l r a period of sharp dr rr rr ff roduction mix. In 2023, according to the Recreation Vehicle Industry Arr We estimate that our mix of RV revenues related to towabla e units and motorized units is consistent with the overall RV ssociation ("RVIA"), towable and industry p rr motorized unit shipments represented appr holesale 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. oximately 85% and 15%, respectively, of total RV iRR ndustry wrr a Recreational vehicle purchases are generally consumer discretionary income purchases, and thereforff e, any situation which causes concerns related to discretionary income may have a negative impact on the RV mRR arket. The Company believes that industry-rr wide retail sales and the related production levels of RVsRR will continue to be dependent on the overall strength of the economy, consumer confidff ence levels, equity securities market trends, fluff ctuat tions in dealer inventories, the level of disposable income, and other demographic trends. Demographic and ownership trends continue to point to favorable market growth for the long term in the RV mR arket, as we believe that there has been a shift toward outdoor, naturt e-based tourism activities in a post-COVID environment, with younger and more diverse campers across diffeff rent socio-economic groups. According to the 2023 Kampgrounds of America, Inc. ("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 froff m 57 million in 2021 and 42 million in 2019. 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. 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. While this percentage was down froff m 37% in 2021, these higher-income households still represented a significantly greater proportion of campers than before the COVID-19 pandemic. Detailed narrative inforff mation about Discussion and Analysis of Financial Condition and Results of Operations” (the "MD&A") of this Form 10-K. the Company’s sales to the RV iRR rr ndustry i s included in Item 7. “Management’s a 6 Marineii rr tyle and by economic conditions. The sharp i tyle, similar to our RV end We believe that the marine market refleff cts the active, outdoor leisure-based, family-oriented lifesff market, and the Company has increased its focus and expanded its presence in this market through recent acquisitions, particularly within the last three years. Consumer demand in the marine market is generally driven by the popularity of the recreational and leisure lifesff ts, which is our primary marine market, experienced during the COVID-19 pandemic continued through 2021 and into 2022, although y chain constraints limited wholesale unit shipments which resulted in higher order backlogs and historically low dealer suppl u inventory l evels, during the first half of 2022. While these supply chain constraints improved durd ing 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 l evels. 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. We expect to continue to feel the effects of our revenue mix through the firff st 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 t hat we serve. ncrease in demand forff r powerboa rr r rr turers Association (“NMMA”), per its 2022 U.S. Recreational Boating Statistical According to the National Marine Manufacff Abstract (the "Abstract"), U.S. retail expenditures on boats, engines, accessories, and related costs totaled appa roximately $59.3 billion in 2022, up approximately 4.4% from 2021. Based on data froff m the Abstract, we estimate that the average age of pre-owned powerboa oximately 23 years compared to an average usefulff ts sold during 2022 was appr f 30 years. life off a r re primarily focff used on the powerboa The Company’s sales to the marine industry arr t sector of the market which is comprised of four main categories: fiberglass, aluminum fishing, pontoon and ski & wake. Based on current availabla e data per SSI ioximatelyly 35% of retailil r through December 2023, within the powerboa iunit s lales, allu iminum 25%, pontoon 34% andd skiki & w kake 6%. In addiddi ition, per SSI m, t retail unit shipments ioximatelyly 5% iin 2023 compared to 2022, while marine wholesale unit shipments, according to Company decreased appr estimates based on NMMA data, increased approximatelyy 2% in 2023 compared to 2022. Additional inforff mation about the Company’s sales to the marine industry i t sector for 2023, fiberglass units account ded for appr s included in the MD&A of this Form 10-K. arine powerboa a a rr r r Manufacff tured HouHH singii hThe Compa yny’s prodducts for thihis markket are soldld priimarililyy to majajor manufact to la lesser extent, manufacff 80% of MH ma krket retailil urt ers of manufact turers iin dadjajadd cen it i dndustriies. In hthe aggggr gegate, hthe top hthree manufact iunit shihipments iin 2023 per SSI. ff ff ff urt urt ers prodduc ded appr ded hhomes, o hther OEMs, andd ioximatelyly r r ioximatelyly 89,200 iunits iin 2023 afteff hthiis ma krket iin hth le l gong term ddriiven byby pent-u dp du iunits iin 2009 to iunits iin 2022. hThe Compa yny bbelilieves thhere iis emandd, mul ilti-familymily hhousiingg cap iaci yty d, demand fd forff drd babilityility andd qualili yty d, dem gographihic tre dnds su hch as iincreas ded fifirst- itime hhom be b yuyers leal estate iinvestment lvol ivi gng ne deds of our OEM customers i, inclludidi gng energygy ts. We contiinue to expa dnd our pr doduct offe iri gngs to meet hthe e icient water hheaters, furnaces h, heatiingg, ventilila ition, andd aiir co dindi itio ini gng (("HVAC )") dduct syystems andd o hther pr doducts for hWh loles lale u init shihipments hhave iincreas ded iin hthe M iH i dndustryy f appr ggrow hth poten itial fl forff llower-cost rentall optiions i, increas ded affoff andd u brban-to-subbur trusrr effififf OEMs se kekiingg to exceed gd government sust iainabibia lili yty guiguiddelilines on manufact bbar n r lelocatiions trendds, new hhome p iri ici gng, and id investments froff heachiingg a 15-yyear hihighgh of 112,900 roff m a llow of appr dm dev lelopers andd r ioximatelyly 49,800 ded hhomes. urt u a rr ff Factors that may favorably impact production levels furff nclude jobs growth, consumer confidff ence, rence between interest rates on MH loans and mortgages favorable changes in finff ancing regulations, a narrowing in the diffeff on traditional residential "stick-built" housing, and any improvement in conditions in the asset-backed securities markets for manufact ther in this industry i urt ed housing loans. ff rr We believe that MH units offeff mortgage interest rates have negatively impacted housing affordability. r a cost-effective housing solution in a time when high home prices coupled with increased Additional inforff mation about the Company’s sales to the MH industry i rr s included in the MD&A of this Form 10-K. Industritt al Marketstt 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 forff our products and new residential tion and existing home remodeling activities. Patrick's sales to the industrial market generally lag new housing construcrr 7 housing starts by four unit construcrr ff tion and will vary based on diffeff rences in regional economic prospects. to six months as our industrial products are generally among the last components installed into new ff urt Many of Patrick's core manufact ing products are also utilized in the kitchen cabinet, high-rise, office and household furniture, hospitality, and fixturt es and commercial furff nishings markets. These markets are generally categorized by a more performance-than-price driven customer base and provide an opportunity for the Company to diversify its customer base. Additionally, we believe that other residential and commercial segments have been less vulnerabla e to import competition, and thereforff e, provide opportunities forff t firff st half of ily housing starts experienced significant softnff ess in the second half of 2023. Single-family housing starts 2023, multifamff r declining significantly earlier in the year. Housing prices were resilient last began to recover in the second half of 2023 afteff interest rate cuts in 2024, combined with low year in the faceff inventory arr our industrial market in 2024, particularly if economic uncertainties recede. nd high prices for existing homes for sale, may provide suppor of a continued elevated mortgage rates. The potential forff increased sales penetration and market share gains. Afteff r a relatively flaff t forff u Additional inforff mation about the Company’s sales to the industrial markets is included in the MD&A of this Form 10-K. Strategic Acquisitions q g The Company is focused on driving growth in its primary markets through the acquisition of companies with strong management teams having a strategic fitff with Patrick’s core values, business model and customer presence, as well as additional product lines, facff ilities, or other assets to complement or expand its existing businesses. 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 manufact ts end market exposure and presence, and expand its footprt int outside of its core Midwest markets. ing and distribution, diversify i urt ff ff , 2023 the Company completed acquisitions for appr During three years has completed acquisitions for appr the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K forff completed by the Company in 2023, 2022 and 2021. oximately $30 million of total consideration and over the last oximately $804 million of total consideration. See Note 3 "Acquisitions" of further discussion of acquisitions a a ff In January 2024, the Company announced that it completed its acquisition of Sportech, LLC, a leading designer and urt er of high-value, complex component solutions sold to powersports OEMs, adjad cent market OEMs and the manufact afteff rmarket. See Note 17 "Subsu equent Events" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K forff further discussion. p Competition The RV,R marine, MH and industrial markets are highly competitive, both among manufact components. The barriers to entry for each industry arr and safetff y requirements, and the initial capital investment required to establish manufact urt ers of manufact Company competes with manufact range of products and services, competition exists primarily on price, product feat delivery,rr basis. However, in order forff capital commitment and investment in personnel and facilities would be required. urt ers and the suppliers of various tandards, codes ing operations. In addition, the ff urt ed homes with vertically integrated operations. Across the Company’s urt es and innovation, timely and reliabla e quality and customer service. Several competitors compete with Patrick in each product line on a regional and local a competitor to compete with Patrick on a national basis, the Company believes that a subsu tantial re generally low and include compliance with industry s urt ff ff rr ff ff Capacity and Plant Expansions p p y lities. Capital expenditures forff urt certain producd ts in excess of capacity at certain facilities by shifting production to Patrick has the abia lity to fulfilff l demand forff 2023 consisted of $59 million of investments primarily to provide more advanced other faci ff manufact ade production equipment. Management regularly monitors capacity at its u ff facilities and reallocates existing resources where needed to maintain production efficiencies throughout all of its operations t profitabla e growth, grow its customer base, u and capitalize on commercial and industrial synergies in key regions to suppor and expand its geographical product reach outside its core Midwest market. ing automation, replace and upgr 8 Brandingg New product development is a key component of the Company’s efforts to grow its market share and revenue base, adapta to changing market conditions, and proactively address customer demand. The Company has expanded its product and service offeff rings with the integration of new and innovative product lines into its operations that bring additional value to customers and create additional scale advantages. The StuSS dio o, is located in Elkhart, Indiana. The Studio presents the The Company's Design/Innovation Center and Showroom, The Studi customers to latest design trends and products in the markets served by Patrick, and provides a creative environment forff design products and enhance their brand. The 45,000 square foot facility includes a 25,000 square foot showroom devoted to the display of products, capabilities and services offeff red by each of Patrick’s business units, in addition to offices and conferff ence rooms. 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 forff panels and mouldings, cabinet doors, furniture, lighting and other products. Other o include product development, 3D CAD illustration, 3D printing, photography and marketing. services provided at The Studi t t Marineii Studiodd The Company's Marine Studio, located in Sarasota, Florida, is a comprehensive marine studio showroom, design and engineering center, which provides engineering and integrated design solutions for our marine customers. The 14,000 square foot facility includes a showroom that displays the Company's marine products as well as the marine design and engineering capabilities and services offeff red by our marine businesses. Operatintt g Brandsdd Through its operating brands, the Company provides customers with specific product knowledge, expertise and suppor t that ier of choice for its customers by elevating the customer u are tailored to their needs. The Company strives to be the suppl purchasing experience with expert product line managers, and support staff and strategic partnerships for each operating brand, which help drive effiff ciency and maximize value for its customers. u 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 a and appl ications. Marketing and Distributio g n oximately 4,400 active customers. Its revenues froff m the RV market include As of December 31, 2023, the Company had appr turers of RVs that each account for over 10% of the Company's net sales, Forest River and Thor. sales to two majoa r manufacff 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 producd ts independently from one another. 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, forff the years ended December 31, 2023, 2022 and 2021 respectively. a , 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 ioximatet ly 9%, 9%, and railcar, container, or trucr kload quantities, whihi hch are war hehous ded priior to thheiir salle tot customers. Appr 8% of hthe Compa yny' ds diistribibutiion s gegment’s salles were froff m prodducts hshiipped dd diirec ltlyy froff m thhe su iiers to Patriickk u customer lcallyly, thhere iis a two to four-weekk periiod bd 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. In periods of declining market conditions, customer order rates can decline, resulting in less efficient logistics planning and fulfillmff osts due to increased numbers of shipments with fewer products in each shipment. is in 2023, 2022, a dnd 2021, respectiiv lelyy. yTy ipi ent and thus increasing delivery crr lppl 9 Raw Materials Patrick has arrangements with certain suppl rebate agreements among other terms. u iers that specify exclusivity in certain geographic areas, pricing structures and iers. Our customers do not maintain long-term suppl Raw materials are primarily commodity products, such as lauan, gypsum, particleboard and other softwood and hardwood lumber products, aluminum, copper, plastic resin, fiberglass and overlays, among others which are availabla e fromff many suppl y contracts, and therefore, the Company bears the risk of accurate u forecasting of customer orders. Our sales in the short-term could be negatively impacted in the event any unforff eseen negative circumstances were to affeff ct our majoa r suppliers. In addition, demand changes in certain market sectors can result in fluctuating costs of certain more commodity-oriented raw materials and other products that are utilized and distributed. u As a result of COVID-19 and other macroeconomic factors, the supply chain was previously impacted by increased commodity prices, decreased product availabia lity, longer lead times and higher transportation costs, which resulted in y chain constraints by u increased raw material pricing from several of our suppl u carrying increased levels of inventory arr ies of materials. Beginning in the second half of 2022 and throughout 2023, the Company reduced its inventory i n alignment with lower OEM production levels. We believe that, as of December 31, 2023, the Company’s inventory l evels are appropriately balanced with ased on anticipated customer needs. Additionally, the expected OEM production, and we will continue to manage inventory brr Company continually explores alternative sources of raw materials and components, both domestically and froff m outside the all of its material purchases. U.S. Alternate sources of suppl u nd partnering with suppl iers. Patrick took steps to mitigate these suppl iers to help secure adequate suppl y are availabla e forff u u rr rr y Regulation and Environmental Quality Q g eral, state, and local The Company’s operations are subject to environmental laws and regulations administered by fedff regulatory arr uthorities including requirements relating to air, water, land and noise pollution. Additionally, these requirements regulate the Company's use, storage, discharge and disposal of hazardous chemicals used or generated during specific manufact ing processes. urt ff Select products are subject to various legally binding or voluntary s tandards. For example, the composite wood subsu trate materials that Patrick utilizes in the production process in the RV marketplt ace have been certifieff d as to compliance with applicable emission standards developed by the Califorff nia Air Resources Board (“CARB”). All suppliers and manufact urt ers of composite wood materials are required to comply with the current CARB regulations. ff rr ff urt The Company is certified to sell Forestry Stewardship Council (“FSC”) materials to its customers at certain of its manufact ing branches. The FSC certificff ation provides a link between responsible production and consumption of materials from the world’s forff ests and assists the Company’s customers in making socially and environmentally responsible buying decisions on the products they purchase. Upholstered products and mattresses provided by the Company forff RVs must comply with Federal Motor Vehicle Safetff y Standards regulated by the National Highway Traffiff c Safetff y Administration regarding flaff mmabia lity. Select raw materials are subject to tariffs and other import dutd ies. For example, we have historically received benefitsff from duty-free imports on certain products from certain countries pursuant to the U.S. Generalized System of Preferff ences ("GSP") program. Additionally, we are subju ect 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 manufact construcr tion regulations promulgated by the U.S. Department of Housing and Urbar n Development. ff urt ed homes that must comply with performance and For additional inforff mation on the Company's efforts forff sustainabia lity and environmental quality, please see our 2023 Responsibility & Sustainability Report under "ESG" on the "For Investors" section of our website. Inforff mation on our website is not incorporated in this Annual Report on Form 10-K. Seasonalityy ff urt ing operations in the RV,R marine and MH industries historically have been seasonal and at their highest levels Manufact when the weather is moderate. Accordingly, the Company’s sales and profits had generally been the highest in the second 10 rr rr rends in the past several years have included the impact related to quarter and lowest in the fourth quarter. Seasonal industry t turer open houses for dealers in the August-September timeframe and marine open houses the addition of major RV manufacff imeframe, resulting in dealers delaying certain restocking purchases until new product lines are in the December-February t rends have been, and future trends may be, different than in introduced at these shows. In addition, recent seasonal industry t to volatile economic conditions, interest rates, access to finff ancing, cost of fuel, national and regional prior years dued and marine units and other products for which the economic conditions and consumer confidff ence on retail sales of RVsRR Company sells its components, as well as fluctuations in RV and marine dealer inventories, increased volatility in demand from RV aRR nd marine dealers, the timing of dealer orders, and from time to time, the impact of severe weather conditions on the timing of industry-rr wide wholesale shipments. rr Human Capital Management p g Our people are the heart of our business, and we allocate substantial resources to foster the well-being, success and growth of our team members in an inclusive and diverse environment which we believe is fundamental to our values and our service to our customers. 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. The majority of our team members work in our facilities to produce or distribute products for our customers. Our investment in human capital resources focuses on this environment to ensure their well-being and success. 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 lowing, in addition to our health care insurance and other employment benefitff s: capital management programs focff us on the folff • • • • • • Free assistance programs availabla e to all team members and their famff which arise, which we believe are essential durd ing periods of uncertainty; ilies to address mental health and other matters Tuition reimbursement programs availabla e to all team members as they pursue educational opportunities; Leadership programs availabla e to all employees that are designed to fosff advance team members to the next stage of their careers; ter leadership and communication skills to Job safety analysis, which identifieff s risks unique to each production environment, training and empowering our team members to mitigate risks and develop workplk ace best practices; Occupau tional Safetff y and Health Administration ("OSHA") preparedness, which involves site specific training development to educate and enable our team members to work safelff y and effeff ctively; 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 fosff capabilities to operate our facilities in the safest and most effecff ter best-practice operational techniques forff tive manner; our team members to advance their 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 effeff ctive and comforff tabla e 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 success is dependent on our ability to hire, retain, and engage highly qualifieff d team members who serve our customers. In this regard, we aspire to be a merit-based organization that is inclusive and diverse, building a culture where our team they belong. Our leadership development programs bring a diverse and energetic source of talent to lead the members feel future of our organization, and our recruir ter an inclusive culture that we believe strengthens our organization and our ability to serve our customers. rts strive to fosff tment effoff ff 11 The organization is built on our six core founda ff tional values of being BETTER Together: • • • • • • Balance - We work to build a healthy work environment that encourages excellence, happi work and our home life.ff a ness, and peace in both our Excellence - We strive to meet the highest possible standards of achievement in our work and our relationships. Trust - We do what we say we will do every t rr ime - and communicate with all stakeholders if a commitment evolves. Teamwork - We challenge, encourage, equip, empower, and inspire the individuals we work with. Empowerment - We give our team the inforff mation, tools, and trust they need to grow as leaders and achieve results. Respect - We treat our teammates and partners with the utmost honor and dignity. For additional inforff mation on the Company's human capia tal management, please see our 2023 Responsibility & Sustainabia lity Report under "ESG" on the "For Investors" section of our website. Inforff mation on our website is not incorporated in this Annual Report on Form 10-K. Executive Offiff cers of the Companyp y The folff lowing tabla e sets forff th our executive officers as of January 1, 2024: Offiff cer Andy L. Nemeth Jeffrey M. Rodino Kip B. Ellis Matthew S. Filer Joel D. Duthie Stacey Amundson Position Chief Executive Officer President Executive Vice President-Operations and Chief Operating Officer Interim Executive Vice President-Finance, Chief Financial Officer, and Treasurer Executive Vice President-Chief Legal Officer and Secretary rr Executive Vice President-Human Resources and Chief Human Resources Offiff cer Age 54 53 49 51 4 9 57 y a was appoi Andy L. Nemeth nted Chief Executive Offiff cer of the Company in January 2020. Mr. Nemeth previously served as President of the Company froff m January 2016 to July 2021, Executive Vice President of Finance and Chief Financial Offiff cer from May 2004 to December 2015, and Secretary-rr Treasurer from 2002 to 2015. Mr. Nemeth has over 32 years of manufact urt ed housing, recreational vehicle, marine and industrial experience in various financial and managerial capacities. ff y a was appoi Jeffreyff M. Rodino nted President of the Company in July 2021 and was Chief Sales Offiff cer 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. Prior to that, he was the Chief Operating Officer of the Company from March 2013 to September 2016, and Vice President of Sales forff the Midwest from August 2009 to December 2011. Mr. Rodino has over 30 years of experience in serving the recreational vehicle, manufacff tured housing, marine and industrial markets. p a was appoi nted Executive Vice President of Operations and Chief Operating Officer of the Company in Kip B. Ellis September 2016. He was elected an offiff cer 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 served as Vice President of Aftermarket Sales forff the Dometic Group from 2015 to 2016. Prior to his tenure at Dometic, Mr. Ellis served as Vice President of Global Sales and Marketing froff m 2007 to 2015 at Atwood Mobile Producd ts. Mr. Ellis has over 27 years of experience serving the recreational vehicle, marine, manufacff tured housing, industrial and automotive markets. a Matthew S. Filer was appoi nted Interim Executive Vice President-Finance, Chief Financial Offiff cer, and Treasurer in May 2023. He joined Patrick as Senior Vice President of Finance in November 2022. In 2007, he joined Caterpillar Inc. and served ntment to Chief Financial Offiff cer beginning in 2019 in a series of progressive leadership roles which culminated in his appoi 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 forff Progress Rail, Caterpillar's rail division, from 2008 to 2019. a a n May 2021. Mr. Duthie nted as Executive Vice President, Chief Legal Officff er and Secretary i Joel D. Duthie was appoi 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. As a corpor ate 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 manufact urt er of flow control products from 2002 to 2006. r ff rr 12 y a was appoi nted Executive Vice President, Human Resources and Chief Human Resources Offiff cer in May Stacey Amundson apacity with Kerry Foods with a 2022. Prior to joining Patrick in February 2rr focus on providing human resources leadership in the transformation of its North America operations model. Prior to this role, Ms. Amundson was with Spectrumr Brands, Inc. froff m 2005 to 2018, holding a series of key human resources leadership roles, including Senior Vice President, Human Resources and Chief Human Resources Offiff cer from 2010 to 2018. With over 26 years of experience in multiple industries, Ms. Amundson has led the human resource function with specialties in talent management, executive compensation, mergers and acquisitions, integrations, shared services, and large-scale organizational transforff mations. 022, Ms. Amundson served in a temporary crr Websiite Access t Co Compa yny Reports p y p We make availabla e freff e of charge through our website, www.patrickind.com , our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonabla y practicable afteff r such material is electronically filed with or furnished to the SEC. The charters of our Audit, Compensation, and Corporate Governance and Nominations Committees, our Corporate Governance Guidelines and our Code of Ethics and Business Conduct are also availabla e on the “Governance” portion of our website. Our website and the information contained therein or incorpor ated into this Annual Report on Form 10-K. ated therein are not intended to be incorpor p r r ITEM 1A. RISK FACTORS othett r inforff mation set forth i In addition to thett arefulff materially affeff ct our business, financial condition or results of operations. TheTT we face. Addidd tional factors nrr adverserr ot presently known to us or that eport, you should cl n thitt s rii tt tt ly affeff ct our business, cash flows, finff ancial condition or results of operations in future periods. ly considerdd s dkk riskii we currently deem to be immaterial alsoll may ma the folff lowing factors wrr esdd cribed below are not the only rll hich couldl isks aterially Risks Related to our Business Economic and business conditiii ons beyond Patrick's c' luff ctuations in and negativtt ely i products,tt tt eall d to f ll could l ontrol, ill ncii cyclicll alityll ludingii . act opeo rating resultsll ll mpii and seasonality in the indii ustritt es it sells The RV,R marine, MH and industrial markets in which we operate are subject to cycles of growth and contraction in consumer to external factors such as general demand, and volatility in production levels, shipments, sales and operating results, dued economic conditions, consumer confidff ence, employment rates, finff ancing availabia lity, interest rates, inflaff tion, fuel prices, and other economic conditions affeff cting consumer demand and discretionary spending. Periods of economic recession and downturt ns have adversely affected our business and operating results in the past, and have potential to adversely impact our In future results. Consequently, the results for any prior period may not be indicative of results for any future period. addition, fluctuation in demand could adversely affect our management of inventory,rr which could lead to an inability to meet customer needs or a charge for obsolete inventory.rr ff urt ing operations in the RV,R marine and MH industries historically have been seasonal and at their highest levels Manufact 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. Seasonal industry t rends in the past several years have included the impact related to turer open houses for dealers in the August-September timeframe and marine open houses the addition of major RV manufacff imeframe, resulting in dealers delaying certain restocking purchases until new product lines are in the December-February t introduced at these shows. In addition, recent seasonal industry t rends have been, and future trends may be, different than in to the impact of COVID-19, volatile economic conditions, interest rates, access to finff ancing, cost of fuel, prior years dued national and regional economic conditions and consumer confidff ence on retail sales of RVsRR 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 froff m RV aRR nd marine dealers, the timing of dealer orders, and from time to time, the impact of severe weather conditions on the timing of industry-rr wide wholesale shipments. rr rr rr If the finff ancial conditidd on of our customers and supplpp iell rs deterioratestt , os ur busineii ss and opeo rating resultsll could sll uffeff r. The markets we serve have been highly sensitive to changes in the economic environment. Weakening conditions in the economy, or the lack of available financing in the credit market, could cause the finff ancial condition of our customers and suppl t our business through the loss of sales or the inabia lity to meet our u commitments. Many of our customers participate in highly competitive markets and their financial condition may deteriorate iers to deteriorate, which could negatively affecff 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. Our salesll on our opeo rating resultsll and finff ancial conditiodd ially concentratedtt withii are matertt n. two customers, the losll s of eo ithett r of wo hich could hll ave a material adverserr impacm t Two customers in the RV mR arket accounted for a combined 29% of our consolidated net sales in 2023. The loss of either of these customers could have a material adverse impact on our operating results and finff ancial 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 suppl y them at current levels. u Changes in c results. ii onsumer prefee rences relating to ott ur products could all dverserr ly impact our sales level s all ll nd our opeo ratingii Changes in consumer preferff ences, or our inability to anticipate changes in consumer preferff ences for RVsR , marine models or manufact our products and adversely affect our operating results and finff ancial condition. the products we make could reducd e demand forff urt ed homes, or forff ff ial percentagea A matertt shipments ott results and finff ancial conditdd iott n. r reductions in industrytt of the ComCC panm y’n s s’ alesll growth could r are concentratedtt educe demdd ll in the RV indii ustry,r and decldd and forff our products att nd adverserr inll es in the levell l of Ro V unitii ly impact our operating In 2023 and 2022, the Company's net sales to the RV industry wrr consolidated net sales. While the Company measures its RV mRR the underlying health of the RV iR ndustry i tied to general economic conditions and consumer confididff ence. Declilines iin RV iunit shihipmen lt lev lels or r deducd dnd hhave a materiiall addvers ggrow hth co luldd materiiallllyy r deducd e thhe Companyy’s revenue from thhe RV iinddustryy a opera itingg res lults iin 2024 andd o hther future pe iri dods. oximately 43% and 53%, respectively, of arket sales against industry-rr wide wholesale shipment statistics, historically have been closely itions iin iinddustryyrr ie impact o in its s determined by retail demand. Retail sales of RVsRR a ere appr rr rr ns in the credit mii arkerr t could limit the abiliii tyii of consumers,rr dealerll and wholesale finaii ncing forff RVs, ms arine products,tt and manufacff s arr nd wholesll ale cll esultinll ustomers to obtaitt n r ii g in r ll floor educed demand for our etaitt tured homes, rs l,ii ii Conditiodd planll products.tt Restrictions on the availabia lity of consumer and wholesale finff ancing for RVsRR , marine products, and manufact urt ed homes and increases in the costs of such financing have in the past limited, and could again limit, the abia lity of consumers and wholesale customers to purchase such products, which would result in reducd ed production by our customers, and therefore reduce demand for our products. ff Loans used to finff ance the purchase of manufact urt ed homes usually have shorter terms and higher interest rates, and are more site-built homes. Historically, lenders required a higher down payment, higher credit difficult to obtain, than mortgages forff scores and other criteria for these loans. Current lending criteria are more stringent than historical criteria, and many potential buyers of manufact urt ed homes may not qualify.ff ff ff ff urt ed housing loans are also dependent on economic conditions, lending The availabia lity, cost, and terms of these manufact practices of financial institutions, government policies, and other factors, all of which are beyond our control. Reductions in urt ed homes and increases in the costs of this financing have limited, and could the availabia lity of financing forff manufact continue to limit, the abia lity of consumers and wholesale customers to purchase manufact urt ed homes, resulting in reducd ed tured homes by our customers, and therefore reduced demand for our products. In addition, certain production of manufacff provisions of the Dodd-Frank Act, which regulate finff ancial transactions, could make certain types of loans more difficult to obtain, including those historically used to finance the purchase of manufact urt ed homes. ff ff ff The RV, marineii resources than we do. , Me H aMM nd industritt al industritt es are highlgg y cll ompem titive and some of our compem titors may ha ave greatertt We operate in a highly competitive business environment and our sales could be negatively impacted by our inability to maintain or increase prices, changes in regional demand or product mix, or the decision of our customers to purchase our competitors’ products or to produce in-house products that we currently produce. We compete not only with other suppliers 14 iers of to the RV,R marine, MH and industrial producers, but also with suppl ted by pricing, purchasing, financing, advertising, operational, cabinetry and countertops. Sales could also be affecff promotional, or other decisions made by purchasers of our producd ts. Additionally, we cannot control the decisions made by suppl urt ed products and therefore, our ability to maintain our distribution arrangements u may be adversely impacted. iers to traditional site-built homebuilders and suppl iers of our distributed and manufact u u ff Some of our competitors have greater financial resources or lower levels of debt or finff ancial leverage and this may enable them to commit larger amounts of capital in response to changing market conditions. Further, competitors may develop innovative new products that could put the Company at a competitive disadvantage. If we are unabla e to compete successfulff ly turers and suppliers to the RV,RR marine and MH industries as well as to the industrial markets we serve, against other manufacff we could lose customers and sales could decline, or we may not be able to improve or maintain profitff margins on sales to customers or be abla e to continue to compete successfulff ly in our core markets. Our opeo rating resultsll transportation and othett can be adverserr by infln atll r necessary suppu lies and services. ly affeff ctedtt iott n, changes in t ii hett cost or availaii bilityii of raw matertt ials, es nergy,gg u We are currently experiencing inflationary pressures on our operating costs. The prices of key raw materials, consisting primarily of lauan, gypsum, fibff erglass, particleboard, aluminum, softwff oods and hardwoods lumber, resin, and petroleum- y and demand and other factors specific to these commodities as well as general based products, are influenced by suppl inflationary pressures, including those driven by supply chain and logistical disrupt ions. Pricing and availabia lity of finished goods, raw materials, energy, transportation and other necessary suppl ies and services for use in the Company’s businesses can be volatile due to numerous factors beyond its control, including general, domestic and international economic costs, production levels, competition, consumer demand, import dutd ies and tariffs, conditions, naturt al disasters, labor currency exchange rates, international treaties, and changes in laws, regulations, and related interprr etations. 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. u a rr In addition, prices of certain raw materials have historically been volatile and continued to fluff ctuat te in 2023. During periods of volatile raw materials, energy and transportation costs, we have generally been able to pass both cost increases and decreases to our customers in the form of price adjustments, however, there can be no assurance futff urt e cost increases or decreases, if any, can be partially or fully passed on to customers, or that the timing of such sales price increases or decreases will match raw materials, energy and transportation costs increases or decreases. Sustained price increases may lead to declines in volume as competitors may not adjud st their prices or customers may decide not to pay the higher prices, which could lead to sales declines and loss of market share. While we seek to project tradeoffs between price increases and volume, our projections may not accurately predict the volume impact of price increases. As a result, fluctuations in raw materials, energy and transportation costs could have a material adverse effect on the Company’s business, results of operations and financial condition. hain issues, is ncii Supplpp y cll a capac manufacff turingii impact on our busineii tt nvii or obsoletll e i entory, wyy ludingii finaii ncial problemll s of mo anufacff turers or supplu ity that increase our costs or cause a delay ia n oii ss and opeo rating resultsll ur abilityii re to estimate customtt , as nd our faiff luii tt iell rs, or a shortage to fulfillff er demand properly mll orders, could hll ials or atertt ave an adverserr ay result in excess of adequate mtt hich could all dverserr ly affeff ct our gross margins. ished parts. We are reliant on our extended supply chain and any disrupt Generally, our raw materials, supplies and energy requirements are obtained froff m various sources. These purchases include unforff med materials and rough and finff ion in this suppl y chain could have an adverse impact on our ability to deliver products to our customers on a timely and cost-effeff ctive u basis. While alternative sources are availabla e, our business would be materially adversely affected if we are unabla e to finff d alternative sources on a timely and cost-effeff ctive basis. A reduction or interruptu ion in supply; a significant increase in the price of one or more materials; a faiff lure to appropriately cancel, reschedule, or adjud st our requirements based on our business and customer needs; could materially our business, operating results, and financial condition and could materially damage customer relationships. adversely affect urt e our products, the price of these materials may increase, or these If there are shortages of materials we need to manufact materials may not be availabla e at all, and we may also encounter shortages if we do not accurately anticipate our needs. We may not be able to secure enough materials at reasonabla e prices or of acceptabla e quality to build new products in a timely r until other manner in the quantities or configff urations needed. Accordingly, our revenue and gross margins could suffeff lly sources can be developed. Our operating results would also be adversely affected if, aff nticipating greater demand than actuat develops, we commit to the purchase of more materials than we need, which is more likely to occur in a period of demand lure to adequately authorize procurement of inventory brr y our manufact urt ers; or a faiff ff ff r ff 15 u iers seek bankrupt uncertainties such as we are currently experiencing. There can be no assurance that we will not encounter these problems in cy relief or otherwise cannot continue their business as r the futff urt e. In addition, if any of our suppl anticipated, the availabia lity or price of these requirements could be adversely affected. A global economic downturt n and related market uncertainty could negatively impact the availabia lity of materials froff m one or more of these sources of these materials, especially during times such as we have recently seen when there are suppl and other ier constraints based on labor ources in a timely manner, which could harm our actions due to the COVID-19 pandemic. We may not be able to diversify s ability to deliver products to customers and seriously impact present and future sales. In addition, when facing component suppl rts in procuring materials in order to meet customer expectations which u in turn contribute to an increase in purchase commitments. Increases in our purchase commitments to shorten lead times our products is less than our expectations. If we harges if the demand forff could also lead to excess and obsolete inventory crr fail to anticipate customer demand properly, an oversupply of parts could result in excess or obsolete components that could adversely affect our gross margins. y-related challenges, we have increased our effoff u a ff If we cannot effee profitaff bilityii may sa uffeff r. ctivtt ely mll anage thett challell nges and risks associatedtt withii doingii busineii ss internatiott nally, oyy ur revenues and u l obligations and intellectuat ies froff m suppliers located in Indonesia, China, Malaysia We purchase a material portion of our raw materials and other suppl and Canada. As a result, our ability to obtain raw materials and suppl ies on favff orable terms and in a timely fashion are u subju ect to a variety of risks, including fluctuations in foreign currencies, changes in the economic strength of the foreign countries in which we do business, difficulties in enforff cing contractuat l property rights, compliance burdens associated with a wide variety of international and U.S. import laws, and social, political, and economic instability. Our business with our international suppliers could be adversely affected by restrictions on travel to and froff m any to a health epidemic or outbrt eak, such as the COVID-19 pandemic, or other of the countries in which we do business dued event. Additional risks associated with our foreign business include restrictive trade policies, imposition of dutd ies, taxes, or government royalties by foreign governments, and compliance with the Foreign Corruptu Practices Act and local anti-briberyrr laws. Any measures, or proposals to implement such measures, could negatively impact our relations with our international t on our u suppl business and operating results. We maintain limited operations in Mexico, China and Canada but are nevertheless exposed to risks of operating in those countries associated with: (i) the diffiff culties and costs of complying with a wide variety of complex laws, treaties and regulations; (ii) unexpected changes in political or regulatory err nvironments; (iii) earnings and cash , exchange controls, or other restrictions; flows that may be subju ect to tax withholding requirements or the imposition of tariffsff (iv) political, economic, and social instability; (v) import and export restrictions and other trade barriers; (vi) responding to disrupt ions in existing trade agreements or increased trade tensions between countries or political or economic unions; (vii) r maintaining overseas subsidiaries and managing international operations; and (viii) fluctuations in foreign currency exchange rates. iers and the volume of shipments to the U.S. froff m these countries, which could have a materially adverse effecff Our business is sii ubjeb ct to riskii restritt ctiott ns could hll flowll s.w s akk ave a material adverserr ssociatedtt withii importingii products,tt and thett imposition of ao effeff ct on our business, results of operations, fs dditioii nal dutiett s, tariffi s off inff ancial conditiodd r tratt de n, and cash u ears to be continued bipartisan suppor There are risks inherent to importing our products. Virtually all of our imported products are subject to duties which may impact the cost of such products. In addition, countries to which we ship our products may impose safegff uard quotas to limit the quantity of products that may be imported. We rely on free trade agreements and other suppl y chain initiatives in order to from duty-free maximize efficiencies relating to product importation. For example, we have historically received benefitsff imports on certain products from certain countries pursuant to the Generalized System of Preferff ences ("GSP") program. Although there appa t of the GSP program, the provisions have not been renewed since they expired on December 31, 2020. If the GSP program is not renewed or otherwise made retroactive, we would recognize significant additional dutd ies and profitaff bia lity could be negatively impacted. The United States has imposed tariffs and export controls on certain goods and products imported froff m China and certain other countries, such as plywood, which has resulted in retaliatory tariffff s bff imposed by the United States on a broader range of imports, or furff ther retaliatory trade measures taken by China or other countries in response, could result in an increase in y chain costs that we may not be able to offsff et or that may otherwise adversely impact our results of operations. u suppl Additionally, we are subju ect to government regulations relating to importation activities, including related to U.S. Customs and Border Protection ("CBP") withhold release orders. The imposition of taxes, dutd ies and quotas, the withdrawal from or material modification to trade agreements, and/or if CBP detains shipments of our goods pursuant to a withhold release order on our business, results of operations and finff ancial condition. If additional tariffsff or trade could have a material adverse effect y China and other countries. Additional tariffsff u ff 16 restrictions are implemented by the U.S. or other countries, the cost of our products could increase which could adversely affeff ct our business. If we are unable t ll o mtt anage our inventory, oyy ur operating resultsll could bll e matertt ially and adverserr .dd ly affeff ctedtt rr u ommitments, based on our projections of future customer orders. We maintain an inventory t y contracts with our customers and, thereforff e, we must bear the risk of certain We generally do not have long-term suppl o support these inventory c to macroeconomic customers’ needs. During periods of sharp f luff ctuat r ions, public health emergencies, or other influff ences, some of factors, changes in end consumer demand, suppl u evels they maintain and the purchases of our products. While our customers will make adjud stments to the inventory l r down. If responding to these changing dynamics in the end markets we serve, our inventory r we are unabla e to adjust to our customers’ changing inventory nrr eeds and purchases of our products, our business could be adversely affected. Changes in demand, market conditions and/or product specifications could result in material obsolescence and a lack of alternative markets for certain of our customer specific products and could negatively impact operating results. rr tions in demand, whether increasing or decreasing dued y chain disrupt rr equirements will fluctuate up ou r rr Increases in dii adverserr ly impact our operatingii effiff ciencies. emdd and forff our products ctt ould make it more diffi i cult for us to ott btaitt n aii dditiii onal skilledll labor, wr hich maya In certain geographic regions in which we have operating facilities, we have experienced shortages of qualifieff d employees, which has negatively impacted our costs in the past. While we are taking certain steps to automate aspects of our producd tion andd and distribution, labor a create emplloyyee reten ition andd recr iuir iwi hth kknowlledgedge andd expe irience hhave hthe abibia litylity to hchangge em lpl yoyers more easilyily. shortagges a dnd contiinuedd compe i itition for qualiflifiiefff dd emplloyyees may iy increase thhe cost of our llabbor tment hch lallle gnges, espe ici lallyly dduriing ig impro ivi gng economiic itimes, as em lpl yoyees a If demand for employees continues to increase, we may not be able to increase production to timely satisfy demand, and may initially incur higher labor and production costs, which could adversely impact our financial condition and operating results. Fuel shortagea s or high pgg rices for fueff l could have an adverserr impacm t on our operations. nd marine industries typically require gasoline or diesel fueff their operation, or the use The products produced by the RV aRR y of gasoline and of a vehicle requiring gasoline or diesel fuel for their operation. There can be no assurance that the suppl diesel fuel will continue uninterruptu ed or that the price or tax on fueff l will not materially increase in the future. Shortages of gasoline and diesel fuel, and subsu tantial increases in the price of fuel could have a material adverse effect on our business in the futff urt e. l forff u Interruptu iott ns or disruii operations. ptu iott ns in productiott n at one of our key facilitie ii s could have a matertt ial adverserr impact on our turing and distribution facff ilities across the continental United States. A significant interruption or We operate manufacff ion in operations at our locations resulting froff m severe weather conditions or natural disasters, including but not r disrupt ion of the sourcing of limited to hurricanes, tornadoes, blizzards, earthquakes or otherwise, could result in the disrupt materials, manufact ing of our products, or order fulfilff lment and, as a result, could have a material adverse impact on our business, results of operations and finff ancial condition. If in the event of a naturt al disaster or other similar event, we may incur damages and incur losses as a result and be required to deploy additional unexpected capital expenditures in order to ensure faci other initiatives in the short term ff relating to our capital allocation strategy. lities are functioning properly. These unplanned capital expenditures may interruptu urt ff rr Our abilityii to integre ate att cquireii d businesses may adverserr ly affeff ct operations. ff ing, distribution and other func As part of our business and strategic plan, we look for strategic acquisitions to provide shareholder value. Any acquisition tive integration of an existing business and certain of its administrative, financial, sales and marketing, will require the effecff tions to maximize synergies. Acquired businesses involve a number of risks that urt manufact may affect our financial performance, including increased leverage, diversion of management resources, assumption of liabia lities of the acquired businesses, financial reporting systems which do not integrate with the Company's existing finff ancial reporting systems and possible corpor ly integrate these acquisitions, we may not realize the benefits identifieff d in our due diligence process, and our financial results may be negatively impacted. Additionally, material unexpected liabia lities could arise from these acquisitions. ts. If we are unabla e to successfulff ate culture conflicff rr ff 17 We may ia manufacff ncii ur material charger or distii ritt bui turingii .yy tion facilityii s or be adverserr ly impacm ted by tb hett consolidll atdd iott n and/odd r closure of all oll r part of ao ture of our operating facilities with the objective to distribute and/or manufacff ture We periodically assess the cost strucr urt ing and/or products in the most efficient manner. We may make capital investments to move, discontinue manufact ing and/or distribution distribution capabilities, or products and product lines, sell or close all or part of additional manufact facilities in the future. These changes could result in material futff urt e charges or disrupt ions in our operations, and we may not achieve the expected benefits from these changes, which could result in an adverse impact on our operating results, cash flows, and finff ancial condition. urt ff r ff ll ncii ur charger s forff impaim rmii ent of ao alue of those assets or a decldd ssets, is ncii ee inll e in eii xpe ludingii ctedtt goodwill and other long-lgg ivll ed assets, ds ue to potentt tial declinll es ivdd idual reporting unitsii of the profitaff bilityii of the ComCC panm y on r indii We could i in the faiff r vii Company.n 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 subju ect to periodic review and testing to determine whether the asset is recoverabla e or realizable. The events or changes that could require us to test these assets for impairment include changes in our estimated futff urt e cash floff ws, changes in rates of growth in our industry orr r in any of our businesses, and decreases in our stock price and market capitalization. In the futff urt e, if sales demand or market conditions change from those projeo cted by management, asset write-downs may be required. Material impairment charges, although not always affeff cting current cash floff w, could have a material effect on our operating results and balance sheet. The inaii bilityii to attrtt act and retain qualifll ieff d exeee cutive offo icff ers arr nd key pe ersorr nnel may adverserr ly affeff ct our opeo rations. While we include succession planning as part of our ongoing talent development and management process to help ensure the continuity of our business model, the loss of any of our executive officers or other key personnel could reducd e our ability to manage our business and strategic plan in the short-term and could cause our sales and operating results to decline. In addition, our future success will depend on, among other facff tors, our ability to attract and retain executive management, key employees, and other qualified personnel. We could bll e impii acted by pb otentt tial effee cts ott f uo nion organr izing activtt ities. ff urt union. Any disruptu ion in our A small number of our North American employees are currently represented by a labor relationship with such third-party associations could adversely affect our ability to attract and retain qualifieff d employees to meet current or future manufact ing demands at reasonabla e costs, if at all. Further unionization of any of our North American facilities could result in higher costs and increased risk of work stoppages. We are also, directly or indirectly, dependent upon business relationships with third parties having unionized work forces, including suppl iers, customers and logistics companies, and strikes or work stoppages organized by such unions could have a material adverse impact on our business, financial conditions and operating results. Should a work stoppage occur, it could delay the manufact urt e, sale and distribution of our products and have a material adverse effecff t on our business, prospects, operating results and finff ancial condition. u a ff We are subjeb ct to governmrr laws and regulatll the aggra egate,tt would hll ental and enviroii nmental regulatll iott ns or events beyoe nd our control could r iott ns, as nd failure in our complm iall nce effoe s thatt esult i effeff ct on our finff ancial conditiodd ages, expexx nses or liabilitie n and results of operations. ll n dii amdd ii ll rts,tt t indii changes to s uch tt ivdd idually,ll or in ave a material adverserr turing processes involve the use, handling, storage and contracting forff Some of our manufacff recycling or disposal of hazardous or toxic substances or wastes. Accordingly, we are subject to various governmental and environmental laws and regulations regarding these subsu tances, as well as environmental requirements relating to land, air, water and noise pollution. The implementation of new laws and regulations or amendments to existing regulations could materially increase the cost of the Company’s products. We cannot presently determine what, if any, legislation may be adopted by federal, state or local governing bodies, or the effeff ct any such legislation may have on our customers or us. Failure to comply with present or futff urt e regulations could result in finff es or potential civil or criminal liability, which could negatively impact our results of operations or financial condition. 18 We are s bubjejebb ct to fefedderall, stattt e,tt tt ure to l ppaid, expos xx iall biliii tiii es, as nd ffinaii ncial resultsll llocall a dnd certaiin iinternatiiott nall taxtt fof the ComCC panm yy.n reggue lla ition. ChChangges thhett reto ca hn hav ie impii acts on taxeaa s hwhiichh we operate, new iincome, personall a dnd re lal proper yty hThese chha gnges m yay negga itiv lelyy affect our resullts of opera itions, fiinff an ici lal co dindi ition, andd cash fh fllofff ws or iincrease hthe hWhilile we se kek to ensure hthe Compa yny remaiins com lpliiant llegigi lslatiion or chha gnge is in e ixistiing lg l gegiislla ition m yay resullt iin hchangges to amounts owed fd forff taxes. Companyy's effect iwi hth tax r geg lulatiions iin lall jl juriisdidictiions iin iive tax rate. ff We are allso subjubject to thhe examiinatiion of our tax returt ns andd o hther tax matters byby hthe U.S. Internall Revenue Serviice, states iin io increase, or ifif hthe ul iltimate hwhiichh we c donducd ddetermiinatiion of our taxes owed id is forff ondi ition, opera itingg results and cash floff ws could be adversely affected. bt busiiness, andd o hther tax authhoriitiies. If our effeff ctiive tax rates were t an amount iin excess of amounts pre iviouslyly accruer dd, our fifinanciiall c di ll xpe We could e ee tt n pii is i ff lalllelll ggee d dd defefddd ect rience unusual or signigg fii cant litigtt atiott n, governmental invii estigatiott ns, os r adverserr publicll ity arising out of rodducts,tt serviices, ps er icei dved en iviroii nmental il impii acts, os .ee r o hther iwiseii rr We spendd s bubstantiiall resources ensuriingg thhat we com lplyy wiith gh government lal safe yty regulgulatiions, consumer regulgulatiions andd othher sta dnda drds, bbut we cannot ensure hthat em lpl yoyees or othhe ir i dindi ividdualls affififf liliatedd wi hith us ivi lolate such lh laws or ta dnda drds a dnd iinterpreta itions mayy chha gnge on hshort notiice a dnd iimpact our compliliance regulgulatiions. In addiddi ition, regulgulatoryy s iwi hth ggovernment lal standda drd ds does not necessa irilyly preven it i dindi ividduall or cllass actiio ln lawsuiits, statust . Moreover, compliliance hwhere our pr doducd ts hwhiichh can entailil andd ser ivices complyly ll or thhreaten ded ta dnda drds, hwhethher r lelat ded to our pr doducts, ser ivices, li ilitigga ition o gr government iinvestigigatiions of our compliliance or bbusiiness commerciiall r lelatiionshihips, req iuires sigig inifificant expe dinditures of tiime andd o hther resources. Litigitigatiio in is allso iinhherentlyly uncertaiin, a dnd we co luldd expe irience isignignifificant dadverse res lults, whihi hch co luld hd have an addverse effect on our fifinanciiall co dindi ition a dnd resullts of opera itions. In addiddi ition, isignignifificant reputatiional hl harm thhat c isignignifificant cost andd riiskk. In certaiin icircumstances, courts mayy per a lppl iwi hth fedderall a d/nd/or othher a lould hd have a sigig inifificant addverse effeff ct on our bbusiiness, opera itingg res lults and fd fiinfff an ici lal co dindi itio .n iic bablle llaw. Furthhermore, iwi hth regulgulatoryy srr ici ivill actiions even di dadverse p blubliicityity surro di lalllegga ition m yay cause ondi gng to actuat isimplyly resp undi gng an iwillll not imit Publicll healthll effeff ct on our business, results of operations, fs emerger ncies, whethett r domdd inff ancial positiott n and cash flowll s. estic or internatiott nal, such as the COVCC IDVV -19 pandemic, mc ay have an adverserr Pandemics, epidemics or disease outbrt eaks in the U.S. or globally may have a material adverse effect on our business, employees, suppliers, customers, and the general economy. The fulff l effect of these disruptu ions could be diffiff cult to predict, and the estimated length of such disruptu ions may not be readily availabla e to the Company given such an event is affected by a our operations, a health number of fact emergency could have, but is not limited to, the folff ors, many of which are outside of our control. In addition to the effeff cts upon lowing impact: u ff • • • • Decreases in consumer confidff ence and disposable income and increases in unemployment could reducd e demand forff our products by our customers in all of our end markets. Tightening credit standards could negatively impact credit availabia lity to consumers which could have an adverse effeff ct on all of our end markets. Supply chain and shipping interruptu ions and constraints, volatility in demand for our products caused by sudden and material changes in production levels by our customers or other restrictions affeff cting our business could adversely impact our planning and forff ecasting, our revenues and our operations. ion of essential turing and supply elements such as raw materials or other finished product components, transportation, tionary Disruptu ions in our manufacff manufacff workforce, or other manufacff pressures, and our inability to meet our end market customer needs and achieve cost targets. turing and distribution capabilities could result in shortages of materials, inflaff turing and supply arrangements caused by the loss or disrupt r • Material changes in the conditions in markets in which we manufact urt e, sell or distribute our products, including ctions in response to such an event, could adversely impact operations necessary for the ff governmental or regulatory arr production, distribution, sale, and suppor u t of our products. • Failure of third parties on which we rely, including our customers, suppl iers, distributors, commercial banks, and other external business partners, to meet their obligations to the Company or to timely meet those obligations, or ions in their abia lity to do so, which may be caused by their own finff ancial or operational diffiff culties, material disrupt may adversely impact our operations. u r 19 • • • • • cy or insolvency, as a result of rr Certain of our customers may experience financial diffiff culties, including bankrupt r material finff ancial difficulties, they may be unabla e to pay amounts dued such an event. If any of our customers suffeff to us fully, partially, or timely. Further, we may have to negotiate material discounts and/or extended finff ancing terms with these customers in such a situation. If we are unabla e to collect our accounts receivabla e as they come dued , our financial condition, results of operations and cash floff ws may be materially and adversely affected. If we are unabla e to maintain normal operations, or subsequently are unabla e to resume normal operations in a timely fashion, our cash flows could be adversely affecff ted, making it difficult to maintain adequate liquidity or meet debt covenants. As a result, the Company may be required to pursue additional sources of financing to meet our financial obligations and fund our operations and obtaining such financing is not guaranteed and is largely dependent upon ff market conditions and other factors. Disruptu ions to our operations related to a health emergency as a result of absenteeism by infected or ill members of management or other employees, or absa enteeism by members of management and other employees who elect not to come to work due to the illness affeff cting others at our facilities, or due to quarantines. tion and volatility in the U.S. and global capital markets, A public health emergency could lead to severe disrupr which could increase our cost of capital and adversely affecff t our ability to access the capital markets in the futff urt e. In addition, trading prices in the public equity markets, including prices of our common stock, could be highly volatile as a result of such an event. Sustained adverse impacts to the Company, certain suppl iers, and customers may also affeff ct the Company’s futff urt e valuation of certain assets and therefore may increase the likelihood of an impairment charge, write-off, or reserve associated with such assets, including goodwill, indefinite and finff ite-lived intangible assets, property and equipment, inventories, accounts receivable, tax assets, and other assets. u • Increasing raw material and labor costs relating to a public health emergency may also affeff ct our profitaff bia lity. The ultimate impact of public health emergencies, such as the COVID-19 pandemic, on our business, results of operations, financial condition and cash floff ws is highly uncertain and cannot be accurately predicted and is dependent on futurt e developments, including the durd ation 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. Risks Related to Indebtedness Our level ll and take tt instrutt ments.tt and tertt msrr advantagea of indebtedtt nedd ss could all of new business oppor o dverserr ly affeff ct our abilityii to raise additioii nal capitaii ff l to f tt und tunitiii es and prevent us froff m meetintt g our obligll atiott ns underdd our opeo rations our debdd t As of December 31, 2023, we had $1.04 billion of total long-term debt, including current maturities and exclusive of deferff red 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 definff ed in Note 7 "Debt" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K). Our level of indebtedness could have adverse consequences on our future operations, including making it more difficff ult forff us to meet our payments on outstanding debt, and we may not be able to find alternative finff ancing sources to replace our working indebtedness in such an event. Our level of indebtedness could: (i) reducd e the availabia lity of our cash floff w to fund capital, capital expenditures, acquisitions and other general corpor es, and limit our ability to obtain additional r es; (ii) limit our flexibility in planning for, or reacting to, and increase our vulnerabia lity to, changes financing forff in our business and the industry i n which we operate; (iii) place us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged; and (iv) create concerns about our credit quality which could result in the loss of u suppl ier contracts and/or customers. these purpos ate purpos r rr r ff In addition, our debt could have important consequences to us, including: • • increase our vulnerabia lity to general economic and industry crr onditions; require a substantial portion of our cash floff w froff m operations to be dedicated to the payment of principal and interest on our indebtedness, thereforff e reducd ing our liquidity and our ability to use our cash floff w to funff d 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 lity (the “2021 Credit pursuant to the credit agreement that established our revolving credit and term loan faci Agreement”) are at variable rates of interest; ff ff reducd e funds due to the costs and expenses associated with such debt; availabla e forff working capital, capital expenditures, acquisitions and other general corpor r ate purpos rr es, limit our ability to obtain additional finff ancing for working capia tal, capital expenditures, debt service requirements, acquisitions, and general corpor ate or other purpos es; and r rr limit our ability to adjud st to changing marketplt ace conditions and placing us at a competitive disadvantage compared to our competitors who may have less debt. ff If our cash floff ws and capital resources are insuffiff cient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital, or restrucr ture or refinance our indebtedness. These alternative and may not permit us to meet our scheduled debt service obligations, which could cause us measures may not be successfulff to default on our debt obligations and impair our liquidity. In the event of a default under any of our indebtedness, the holders of the defauff and payable, together with accruer d and unpaid interest, which in turn could result in cross-defaults under our other indebtedness The lenders under our 2021 Credit ther loans, and such lenders Agreement could also elect to terminate their commitments thereunder and cease making furff could institute foreclosure proceedings against their collateral, and we could be forff ced into bankrupt cy or liquidation. Our ability to satisfy our debt obligations will depend on our future operating performance which may be affeff cted by factors beyond our control. lted debt could elect to declare all the funff ds borrowed to be dued r Despite our current level of indebtedness, we may be abla e to incur subsu tantially more debt and enter into other transactions ther exacerbate the risks to our financial condition described above. We may be able to incur significant which could furff additional indebtedness in the futff urt e. Although the 2021 Credit Agreement and other debt instrumr ents 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 subsu tantial. These restrictions also do not prevent us froff m incurring obligations, such as certain trade payables, that do not constitutt e indebtedness as defined under our debt instruments. To the extent we incur additional indebtedness or other obligations, the risks described in the risk fact ors related to our indebtedness and others described herein may increase. ff The agra eements covering our indebtedtt nedd ss contaitt n v remain in compliance withii ii ecome imme thereunderdd these covenants, ws ue and payable.ll diateltt y dll could bll ii arious finaii ncial perfor rmance and other covenants. If wII e do ndd e could be in breach of our debdd t agra eements and thett amounts ott utsttt antt ot dingii The agreements governing our indebtedness contain finff ancial and non-financial covenants with which we must comply that place restrictions on us. These restrictions will limit our ability and the abia lity of our subsu idiaries to, among other things: • • • • incur additional indebtedness (including guarantee obligations); incur liens; engage in mergers, consolidations and certain other funff damental changes; dispose of assets; • make advances, investments and loans; • • • • • engage in sale and leaseback transactions; engage in certain transactions with affiff liates; enter into contractuat 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; l arrangements that encumber or restrict pay dividends, distributions and other payments in respect of capia tal stock or subor retire capital stock, warrants or options or subor dinated debt; and u u dinated debt, and repurchase or amend the terms of the documents governing, or make payments prior to the scheduled maturity date of, cff other indebtedness, as applicable. ertain 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 effeff ctively or to take advantage of new business opportunities. A potential failure to comply with these finff ancial and other restrictive covenants in our debt instruments, which, among other things, require us to maintain specifieff d finff ancial ratios could, if not cured or waived, have a material adverse effect on our ability to fulfillff our obligations under our indebtedness and on our business and prospects generally. 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). There can be no assurance that we will maintain compliance with the finff ancial and other covenants under our 2021 Credit Agreement and other agreements governing our indebtedness. If we fail to comply with the covenants contained in our 2021 Credit Agreement, the ity or it could result in our having to refinance the lenders could cause our debt to become due and payable prior to maturt lt under any of our indebtedness, the holders of the defauff indebtedness under unfavff orable terms. In the event of a defauff lted debt could elect to declare all the funds and payable, together with accruer d and unpaid interest, which in turn could result in cross-defaults under our other indebtedness. If our debt were accelerated, our assets might not be sufficient to repay our debt in full and there can be no assurance that we would be abla e to refinff ance any or all of this indebtedness. borrowed to be dued ff Due to i tt ndii ustry cr sources of capia taii expanxx d our busineii ss. onditioii ns and our operating resultsll tt l. If we are unable t o l ll , ts hett uitaii ble sll ocll ate stt re have been times in t ources of capia taii ii hett l when neededdd , wdd past when we have had limitedtt o mtt e may be unable t access tott r aintii aitt n oii ll We depend on our cash balances, our cash floff ws from operations, our 2021 Credit Facility and other financing vehicles to finance our operating requirements, capital expenditures and other needs. If a material economic recession occurred, such as the recession that impacted the economy in 2007-2010, production of RVsRR , marine units and manufact urt ed homes could decline materially, resulting in reduced demand for our producd ts. A decline in our operating results could negatively impact our liquidity. If our cash balances, cash floff ws from operations, and availabia lity under our 2021 Credit Facility are insuffiff cient to finance our operations and alternative capital is not availabla e, we may not be able to expand our business and make acquisitions, or we may need to curtail or limit our existing operations. ff We have letters of credit representing collateral forff es that have been issued under our 2021 Credit Agreement. The inabia lity 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 availabla e forff our casualty insurance programs and for general operating purpos our operations, or cause us to curtail or limit existing operations. r The conditioii nal conversion feature of to hett triggegg red, may aa dverserr . ly affeff ct our finff ancial conditidd on and opeo rating resultsll 1.75% Convertible Notes due 2028 that we issued in December 2021, if ff urt e of the 1.75% Convertible Senior Notes dued In the event the conditional conversion feat 2028 (the "1.75% Convertible Notes") is triggered, holders of the 1.75% Convertible Notes will be entitled to convert the 1.75% Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their 1.75% Convertible Notes, we would be required to settle our conversion obligation equal to the aggregate principal amount of such converted notes through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their 1.75% Convertible Notes, we could be required under appl icable accounting rulr es to reclassify all or a portion of the outstanding principal of the 1.75% Convertible Notes as a current rather than long-term liabia lity. See Notes 8 "Derivative Financial Instruments" and 9 "Accruerr d Liabia lities" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K forff additional details. a The convertible note hedge and warrant transactiott ns may aa common stock.kk ffea ct the value of the 1.75% Convertible Notes and our In connection with the pricing of the 1.75% Convertible Notes, we entered into convertible note hedge transactions with rties”). At the same time, we entered certain of the initial purchasers and/or their respective affilff iates (the “option counterparr into warrant transactions with the option counterpar rties. The convertible note hedge transactions are expected generally to reduce the potential dilution upon conversion of the 1.75% Convertible Notes and/or offsff et any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be. However, the warrant transactions u 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. In addition, the option counterparr rties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the 1.75% Convertible Notes and prior to the maturity of the 1.75% Convertible Notes (and are likely to do so durd ing any observation period related to a conversion of 1.75% Convertible Notes). This activity could cause or avoid an increase or a decrease in the market price of our common stock or the 1.75% Convertible Notes, which could affeff ct a holder's abia lity to convert the 1.75% Convertible Notes and, to the extent the activity occurs durd ing any observation period related to a conversion of 1.75% Convertible Notes, it could affeff ct the number of shares and value of the consideration that a holder will receive upon conversion of the 1.75% Convertible Notes. y Risks Related to Information Security, Cybersecurity and Data Privacy y, y y If our infii orff marr affeff ct our business, repuee tion tectt hnologyo l t ii o ptt systemtt f oo tation and results ott s faiff peo rations. erfor rm adequateltt y,ll our opeo rations could bll e disdd ruptu edtt and could adverserr ly ent, manufacff We are increasingly dependent on digital technology, including information systems and related infrastructurt e, to process and nd communicate with our employees and business partners. We rely record financial and operating data, manage inventory arr on our information technology systems to effectively manage our business data, inventory,rr nd turing, distribution, warranty administration, invoicing, collection of payments, and other business fulfillmff lures, processes. Our systems are subject to damage or interruptu ion froff m power outages, telecommunications or internet faiff l to computer viruses and malicious attacks, security breaches and catastrophic events. If our systems are damaged or faiff function properly or reliabla y, we may incur subsu tantial repair or replacement costs or experience data loss or theft aff nd impediments to our ability to manage our business, which could adversely affect our results of operations. Any such events could result in legal claims or proceedings, liabia lity or penalties under privacy laws, disruptu ion in operations, and damage to our reputation, which could adversely affect our business. y chain, order entry arr u suppl In addition, we may be required to make material technology investments to maintain and update our existing informff technology systems. Implementing material system changes increases the risk of computer system disrupt problems and interruptu ions associated with implementing technology initiatives could disruptu effiff ciency. ation ion. The potential or reduce our operational r er incident or data btt A cybc loss. reach could result in infon rmatiott n thett fte , dtt atdd a ctt orruptu iott n, operational disdd ruptu iott n, and/or// finaii ncial Our technologies, systems, networks, and those of our business partners have in the past been, and may in the future become, the target of cyber-attacks or inforff mation security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of proprietary and other information, or other disruptu ion of our business operations. es of misappropriating assets or A cyber-attack could include gaining unauthorized access to digital systems for purpos r sensitive information, corruptu ing data, or causing operational disruptu ion or destrucr to ransom attacks or malware or tion dued result in denial of service on websites. We have programs in place to detect, contain and respond to data security incidents. age systems change However, because the techniques used to obtain unauthorized access, disabla e or degrade service, or sabot frequently and may be difficult to detect for long periods of time, we may be unabla e to anticipate these techniques or implement adequate preventive measures. Unauthorized parties may also attempt to gain access to our systems or faci lities, or those of third parties with whom we do business, through fraud, trickery, or other forms of deceiving our team members, are, or applications we develop or procure from third contractors, vendors, and temporary s parties may contain defecff ation security. Any cyber-attack on our business could materially harm our business and operating results. The Company currently carries insurance to cover exposure to this type of incident, but this coverage may not be sufficient to cover all potential losses. As cyber threats continue to evolve, we may be required to expend material additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabia lities. If we or our suppl opriately respond to material data u security breaches, we could be exposed to costly government enforcement actions and private litigation and our business and operating results could suffeff iers experience additional material data security breaches or fail to detect and appr urt e or other problems that could unexpectedly compromise informff taff. In addition, hardware, softwff ts in design or manufact r. a a rr ff ff 23 Other Risks Certaitt n pii change in contrott rovisiii ons in oii ur Articlesll t our shareholdell of Incorporatiott n and Amended and Restattt edtt By-lawll to be in their bii est intii ertt est. considerdd rs mightgg l thatt s mw ay delay,a defee r or prevent a Our Articles of Incorpor takeover practices and inadequate takeover bids. These provisions may delay, deferff shareholders might consider to be in their best interest. ation and Amended and Restated By-laws contain provisions that are intended to deter coercive or prevent a change in control that our r Conditiodd liabilityii in the insii urance markets ctt ns withii coverage and could potentt ould impact our abilityii tially result in uninsii ured losses. e to negot iatt te favorable t ertt msrr ll and conditioii ns for various We generally negotiate our insurance contracts annually forff property, casualty, workers compensation, general liabia lity, health insurance, and directors and officers liabia lity 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. While we continually measure the risk/rkk eward of policy limits and coverage, the lack of coverage in certain circumstances could result in potential uninsured losses. Our business, results of operations and finff ancial conditidd on may ba impact on thett Ukraine and Russia, or any on economy am nd capia taii ther geopoliticll l markerr al tensions. ts resultingii ll global e matertt ially and adverserr from internatiott nal confln icll ly affeff ctedtt ts, ss uch as thett egativtt e by any nn confliff ct between t, U.S. and global markets may experience volatility and disruptu ions resulting froff m geopolitical tensions or military conflicff such as the military confliff ct between Ukraine and Russia. The length and impact of geopolitical tensions or military confliff ct are highly unpredictabla e, and can lead to market disrupr tions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptu ions. In addition, geopolitical tensions, military actions and any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional capital. The Company continually monitors ongoing geopolitical tensions and military confliff cts to evaluate any potential impacts they may have on our business, operating results, and financial condition. Risks Related to Ownership of our Common Stock p A variety of factortt common stock.kk s,rr many of which are beyoe nd our control, cll ould infln uence fluff ctuations in the markerr t price for our The stock market, in general, experiences volatility that has often been unrelated to the underlying operating performance of companies. If this volatility continues, the trading price of our common stock could decline materially, independent of our actuat te materially in response to a number of factors, many of which are beyond our control, including the folff l operating performance. The market price of our common stock could fluff ctuat lowing: • • • • • • • • • • 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 venturt es or capital commitments; announcements by us or our competitors of technological improvements or new products; the gain or loss of material customers; additions or departurt es of key personnel; events affecff ting other companies that the market deems comparabla e 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 facff tors. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 1C. CYBERSECURITY Cybersecurity is critical to Patrick’s abia lity to drive its vision and operational initiatives. Patrick faces a range of cybersecurity threats including attacks common to most industries, such as ransomware and denial-of-sff ervice, and attacks from more advanced and persistent, highly organized adversaries. Our customers, suppliers, consultants and subcu ontractors face similar cybersecurity threats, and a cybersecurity incident impacting us or any of these entities could materially adversely affect our operations, performance and results of operations. These cybersecurity threats and related risks make it ised of developments in the inforff mation security field, and we expend imperative that we remain vigilant and appr considerable resources on cybersecurity. a The Board of Directors oversees Management’s processes forff identifyiff ng and mitigating risks, including cybersecurity risks, and to support alignment of our risk exposure with our strategic objectives. Senior leadership, including our Vice President – IT Operations and Chief Information Security Offiff cer (CISO), regularly briefs the Board of Directors on our cybersecurity and inforff mation security posture and the Board of Directors is appr ised of cybersecurity incidents deemed to have a moderate a or higher business impact, even if immaterial to us. In the event of an incident, we intend to follow our incident response protocol, which outlines the steps to be followed froff m incident detection to mitigation, recovery and notificff ation, including notifyiff ng functional areas (e.g., legal), as well as senior leadership and the Board of Directors, as appropriate. ff r ate inforff mation security organization, led by our CISO, is responsible for our overall information security strategy, Our corpor ate inforff mation security policy, security engineering, operations and cyber threat detection and response. The corpor ise security structurt e with the ultimate goal of preventing cybersecurity incidents organization manages the Company's enterprr ible, while simultaneously increasing our system resilience in an effort to minimize the business impact to the extent feas should an incident occur. Central to this organization is our carefulff ly selected combination of security tools that concentrate on both perimeter and internal environments. These solutions are responsible for the protection, detection and response capabilities used in the defense of Patrick’s data and enterprr ise computing networks. Employees outside of our corporate information security organization also have a role in our cybersecurity defenses, which we believe improves our cybersecurity program. r rate information security organization has implemented a governance structurt e and process to assess, identify,ff The corpor rate-wide counterintelligence and insider threat detection manage and report cybersecurity risks. We also have a corpor program to proactively identify eff xternal and internal threats, and mitigate those threats in a timely manner. In addition to developing and implementing pre-existing third party fraff meworks, we have implemented our own practices and customized controls tailored to the Patrick enterprr oach enhances our defense in depth stance while increasing our ability to identify,ff a contain and manage cybersecurity risks. ise environment. We believe this appr Third parties also play a role in our cybersecurity program initiatives. We engage third-party services to conduct evaluations of our security controls, whether through penetration testing, independent audits or consulting on best practices to address new challenges. These evaluations include testing both the design and operational effectiveness of security controls. Assessing, identifying and managing cybersecurity related risks are integrated into our overall enterprise risk management process. Cybersecurity related risks are included in the risk universe that the enterprise risk management function evaluates to assess the top risks to the enterprise on an annual basis. To the extent the enterprr ise risk management process identifieff s a heightened cybersecurity related risk, "risk owners" are assigned to develop risk mitigation plans, which are then tracked to completion. The process’s annual risk assessment is presented to the Board of Directors. We rely heavily on our suppl u suppl u ier, subcu ontractor or third-party partner could materially adversely impact us. y chain to deliver our producd ts and services to our customers, and a cybersecurity incident at a in preventing or mitigating a Notwithstanding the extensive approach we take to cybersecurity, we may not be successfulff cybersecurity incident that could have a material adverse effecff t 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 disruptu ions may not be fully insured. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks. 25 ITEM 2. PROPERTIES es for which they are currently Patrick believes the facilities occupiu ed as of December 31, 2023 are adequate for the purpos being used and are well-maintained. The Company may, as part of its strategic operating plan, further consolidate and/or ilities and may not renew leases on property with near-term lease expirations. Use of our close certain owned facff manufact lities may vary with seasonal, economic, and other business conditions. Our primary ing and distribution faci corporate office is located in Elkhart, Indiana. urt ff ff r , 2023 the Company operated in 23 states in the U.S., Mexico, China and Canada. As of December 31, ff In leased approximately 10.1 million square feet of manufacff approximately 2.9 million square feet, as listed below. turing, distribution and corporate faci , 2023 the Company lities and owned Purpose / Nature Manufact ff urt ing Distribution Manufact ff urt ing & Distribution (shared space) Corporate & Other Total Leased Owned # of Properties 145 48 1 14 208 Square Footage 7,840,000 1,975,000 127,000 109,000 10,051,000 # of Properties 34 14 1 1 50 Square Footage 2,230,000 493,000 94,000 35,000 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. ITEM 3. LEGAL PROCEEDINGS ourse of business. In management's opinion, currently pending legal We are subject to claims and lawsuits in the ordinary crr proceedings and claims against the Company will not, individually or in the aggregate, have a material adverse effect on its financial condition, results of operations, or cash floff ws. Se Ne ote 14 "Com imitments a dnd Contiinggenciies" of hthe Notes to Cons lolididat ded iFinanciiall Statement Form 10-K forff furthhe dr diiscu ission of lleggall matters iin rella ition to co immitments a dnd contiinggenciies. is inclluddedd ellsewhhere iin hthiis ITEM 4. MINE SAFETY DISCLOSURES a Not appl icable. ITEM 5. MARKET FOR REGISTRANTRR ’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES PART II 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 Februarr on behalf of beneficial owners. ry 16, 2024, there were 318 shareholders of record. A number of shares are held in broker and nominee names 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. 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. Any future determination to pay cash dividends will be made by the Board in light of the Company’s earnings, finff ancial 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 forff the three months ended December 31, 2023 . Total Number of Shares Purchased (1) 81,474 $ 10,187 91,674 183,335 Average Price Paid Per Share (1) 72.24 74.50 98.56 Total Number of Shares Purchased as Part of Publu icly Announced Plans or Programs (2) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) 81,474 $ 9,317 — 90,791 78,254,795 77,569,000 77,569,000 Period Oct. 2 - Oct. 29, 2023 Oct. 30 - Dec. 3, 2023 Dec. 4 - Dec. 31, 2023 Total (1) Amount includes 92,544 shares of common stock purchased by the Company in aggregate in November and December 2023 for the sole purpos e 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. rr (2) See Note 11 "Stock Repurchase Programs" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K forff additional inforff mation about a the Company's stock repurchase program. 27 Stoctt k PerPP for rmance Graph The folff lowing graph compares the cumulative 5-year total returt n 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 ation. This graph assumes an initial investment of $100 (with reinvestment of all Industries, Inc., and Wabaa 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. sh National Corpor r Comparison of 5-Year Cumulative Total Return* $400 $300 $200 $100 $0 8 1 / 1 2 / 3 1 9 1 / 1 2 / 3 1 0 1 / 2 2 / 3 1 1 1 / 2 2 / 3 1 2 1 / 2 2 / 3 1 3 1 / 2 2 / 3 1 PATK Peer Groupu Russell 2000 ($) 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Patrick Industries, Inc. Peer Group Russell 2000 $ $ $ 100.00 $ 100.00 $ 100.00 $ 177.93 $ 148.13 $ 123.72 $ 236.31 $ 175.17 $ 146.44 $ 282.90 $ 221.39 $ 166.50 $ 217.68 $ 171.50 $ 130.60 $ 369.19 225.72 150.31 *The stock price performance included in this grapha is not necessarily indicative of futff urt e stock price performance. ITEM 6. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS RESERVED OF OPERATRR IONS This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto included in Item 8 of this Report. In addition, this MD&A contains certain statements relating to futff urt e results that are forff ward-looking statements as that term is defined in the Private Securities Litigation Reforff m Act of 1995. See “Information Concerning Forward-Looking Statements” on page 3 of this Report. 28 EXECUTIVE SUMMARY Overview of Markets and Related Industry Perforff mance Recreational VehVV icle ("RV" ") Industrytt s our primary mrr arket and comprised 43% of the Company’s consolidated net sales in rr ecreased 42% in 2023 compared to 2022. Following a dealer inventory r 2023 Net sales to the The RV iRR ndustry i RV industry drr estocking in the first half of 2022, OEMs dramatically reduced producd tion in the second half of 2022 and throughout 2023 as retail demand decreased and dealer inventory nrr eeds decreased, with the OEMs demonstrating operating discipline to maintain a balanced inventoryrr channel forff the long-term health and stabia lity of the industry.rr rr . oximately 313,200 units According to the RV Industry Arr nit shipments totaled appr in 2023, a decrease of 37% compared to approximately 493,300 units in 2022. RV industry r etail 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"). ssociation (“RVIRR A”), wholesale industry urr a rr Marineii Industrytt Net sales to the marine industry,rr which represented approximately 27% of the Company's consolidated net sales in 2023, decreased 11% in 2023 compared to 2022. Our marine revenue is generally correlated to marine wholesale powerboa t 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 Manufact urt ers Association ("NMMA"). 2023 a decrease of 5% compared to t shipments totaled appr Estimated marine retail powerboa oximately 178,100 units in 2022 retail powerboa t shipments of approximately 188,100 units, according to SSI as economic uncertainty and higher r interest rates impacted demand. a r r ff , Manufacff tured HouHH singii ("MH" ") Industrytt Net sales to the MH industry,rr which represented 16% of the Company’s consolidated net sales in 2023 compared to 2022. MH sales are generally correlated to MH industry wrr from thhe Manufact 21% compared to 2022 MH wholesale industry urr by a decrease in housing affordability caused by elevated interest rates and higher raw material costs. 2023 decreased 19% in ata 2023 a decrease of nit shipments totaled 89,200 units in nit shipments of 112,900 units. Demand forff MH units in 2023 was impacted ded Housiingg Ins ititute, MH wh lholes lale ie ndustry urr holesale unit shipments. Basedd o in i dndustry dy drr urt ff , , Industritt al Market high-rise, The industrial market is comprised primarily of the solid surface countertop industry,rr tures market, offiff ce and hd hous heh lold fd urff niture market and regional distributors. Net sales hospitality, retail and commercial fixff to this market represented 14% of our consolidated net sales in 2023 decreasing 14% in 2023 compared to 2022. Overall, our revenues in these markets are focused on the residential housing, hospitality, high-rise housing and offiff ce, commercial oximately 70% to 80% of our industrial business is construcr directly tied to the residential housing market, with the remaining industrial sales directly tied to the non-residential and commercial markets. ional furff niture markets. We estimate that appr kitchen cabinet industry,rr tion and institutt a , Combined new housing starts decreased 9% in 2023 compared to 2022, with single famff ily housing starts decreasing 6% and multifamily residential starts decreasing 14% for the same period. Our industrial products are generally among the last components installed in new unit construcr r to six months. tion and as such our related sales typically trail new housing starts by fouff 29 CONSOLIDATED OPERATRR ING RESULTS lowing tabla e sets forff The folff statements of income for the years ended December 31, 2023, 2022 and 2021. th the percentage relationship to net sales of certain items on the Company’s consolidated ($ in thousands) Net sales Cost of goods sold Gross profit Warehouse and delivery expenses Selling, general and administrative expenses Amortization of intangible assets Operating income Interest expense, net Income taxes Net income Year Ended December 31, 2023 2022 2021 $ 3,468,045 100.0 % $ 4,881,872 100.0 % $ 4,078,092 100.0 % 2,685,812 782,233 143,921 299,418 78,694 260,200 68,942 48,361 142,897 $ 77.4 22.6 4.1 8.6 2.3 7.5 2.0 1.5 4.1 3,821,934 1,059,938 163,026 327,513 73,229 78.3 21.7 3.3 6.7 1.5 496,170 10.2 60,760 107,214 328,196 $ 1.2 2.2 6.7 3,276,898 801,194 139,606 253,547 56,329 351,712 57,890 68,907 224,915 $ 80.4 19.6 3.4 6.2 1.4 8.6 1.4 1.7 5.5 Year Ended December 31, 2023 Compared to 2022 Net Sales. Net sales in 2023 decreased appr oximately $1.41 billion, or 29%, to $3.47 billion froff m $4.88 billion in 2022. 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. a In 2023 and 2d 022, net salles att iribbut bablle to acq iui isi itions complleted id in eachh of thhos ye years was $17.7 million and $d 121.8 million, respectiiv lelyy. The Company’s RV cRR marine powerboa content per wholesale unit forff r ontent per wholesale unit forff t content per wholesale unit forff 2023 decreased 9% to $4,800 from $5,257 in 2022. The Company's 2023 decreased 5% to $4,803 from $5,032 in 2022. The Company's MH 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. As a percentage of net sales, cost of goods sold decreased 90 basis points durd ing 2023 to 77.4% from 78.3% in 2022. Cost of goods sold as a percentage of net sales decreased forff 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 effiff ciencies as a result of investment in human capital and improved retention rates, (iii) synergies and differff ent cost profilff es from acquisitions completed in 2023 and 2022 and (iv) changes in certain commodity prices, partially offsff et by reduced sales volumes resulting in less favff orable fixed cost absa orptrr ion when compared to the prior year periods. For ors contributed to a 50-basis point decrease in labor as a percentage of net sales and a 330-basis point 2023, these fact decrease in materials cost as a percentage of net sales, partially offsff et by a 300-basis point increase in overhead as a percentage of net sales due to lower sales volumes. 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. ff Gross Profit. Gross profit decreased $277.7 million or 26%, to $782.2 million in 2023 from $1,059.9 million in 2022. As a percentage of net sales, gross profitff as a percentage of net sales in 2023 compared to 2022 reflects the impact of the facff under “Cost of Goods Sold”. increased to 22.6% in 2023 from 21.7% in 2022. The increase in gross profitff tors discussed above a Economic or industry-rr wide factors affecting the profitff ability of our RV, marine, MH and industrial businesses include the urt e our products, the competitive y chain constraints and the labor used to manufact costs of commodities and suppl u ff 30 environment and the impact of diffeff fluctuate froff m quarter-to-quarter and year-to-year. rent gross margin profiles of acquired companies, all of which can cause gross margins to 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 err xpenses were 4.1% in 2023 and 3.3% in 2022. 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 fixff ed 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. 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 variabla e expenses, such as commissions, associated with the decrease in net sales. The increase in SG&A expenses as a percentage of net sales is primarily a result of the fixed naturt e of certain other expenses such as wages, payroll taxes, stock compensation, and insurance, as well as an increase in software and technology expenses. 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. 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, froff m 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. The decrease in operating income and operating margin is primarily attributable to lower net sales and . the items discussed above a 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 increase in interest expense is primarily attributable to the increase in interest rates on our debt subju ect to variable 2023 (the “1.00% Convertible Notes”) in interest rates and the repayment of our 1.00% Convertible Senior Notes dued Februar 2027") which has a comparatively higher interest rate, partially offsff et by lower average debt levels compared to 2022. ry 2023, with borrowings under our revolving credit facility (the "Revolver dued 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. The increase in the effeff ctive tax rate in 2023 was mostly attributable to an increased impact from stock compensation Section 162(m) permanent addback. See our Form 10-K forff enddedd Decembber 31, 2022 compar ded to 2021. hth ye year e dndedd Decembber 31, 2022 for a didiscus ision of our cons lolididat ded opera itingg res lults for thhe yyear Use of Financial Metrics hwhiichh w be b leliieve ar ie important lcalcullatedd u isi gng our ma krket salles hThese met irics ata. louldd not bbe considider ded lalternatiives to accountiingg p irinciiplle gs gener lallyly accepted id in thhe Uniitedd States of Ame irica (("U.S. imila lrlyy ti litledd measures us ded byby othhers. Thhese metriics Our MD& iA inclluddes fiinff an ici lal metriics, su hch as RV, mariine a dnd MH content per measures of hthe Compa yny' bs busiiness performance. Content per didi ividded bd byy Compa yny es itimates of if i dndustryy urr hsh GAAP )"). Our computatiions of content per hsh iunit, iunit met irics ar ge gener lallyly an an lalyysiis of our resullts as reportedd u dnder U.S. GAAP. louldd not bbe considider ded iin iis lolatiion or as s bubs ititutes forff hwhiichh are dde irived fd froff m thihi drd-par yty iinddustry dy drr iunit m yay didiffer froff m si init v lolume, il BUSINESS SEGMENTS ing and distribution, are based on its method of internal reporting. The The Company's reportabla e segments, manufact Company regularly evaluates the performance of the manufact ing and distribution segments and allocates resources to them urt based on a variety of indicators including net sales and operating income. The Company does not measure profitabia lity at the end market (RV, marine, MH and industrial) level. urt ff ff 31 • Manufacff turing – This segment includes the following products: laminated products that are utilized to produce furniture, shelving, walls, countertops and cabinet products; cabinet doors; fiberglass bath fixturt es and tile systems; hardwood furniturt e; vinyl printing; RV and marine furff niture; audio systems and accessories, including amplifieff rs, tower speakers, soundbars, and subwu ooferff s; decorative vinyl and paper laminated panels; solid surface, granite, and quartz countertop fabff rication; RV painting; fabra icated aluminum products; fibff erglass and plastic components; fiberglass bath fixturt es 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 profilff e mouldings; interior passage doors; air handling products; slide-out trim and fasff cia; thermoformed shower surrounds; specialty bath and closet building products; fibff erglass 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, RVsR , aircraft,ff and military and industrial equipment; aluminum and plastic fuel tanks; CNC molds and composite parts; slotwall panels and components; and other products. • all Distribution – This segment includes the distribution of pre-finished wall and ceiling panels; drywrr finishing products; electronics and audio systems components; appliances; marine accessories and components; wiring, electrical and plumbing products; fibff er reinforced polyester products; cement siding; raw and processed lumber; interior passage doors; roofinff g 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. all and drywrr Net sales pertaining to the manufact discussions include intersegment sales. Gross profit includes the impact of intersegment operating activity. ing and distribution segments as stated in the tabla e below and in the following urt ff The table below presents inforff mation 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 16 "Segment Information" of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K. a ($ in thousands) Sales Manufact ff urt ing Distribution Gross Profit Manufact ff urt ing Distribution Operating Income ing ff Manufact urt Distribution Year Ended December 31, 2023 Compared to 2022 Manufacff turingii Year Ended December 31, 2023 2022 2021 $ $ $ $ $ $ 2,653,257 889,408 577,284 195,506 321,096 90,095 $ $ $ $ $ $ 3,681,412 1,287,597 818,960 254,886 531,547 136,889 $ $ $ $ $ $ 3,002,107 1,154,654 598,942 211,241 379,885 106,241 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 appr oximately 75% of the Company’s consolidated net sales in 2023 compared to approximately 74% of the Company's a consolidated net sales in 2022. The sales decrease reflects decreased net sales across all of our end markets. In 2023 and 2022, net sales attributable to acquisitions completed in each of those periods was appr and $121.3 million, respectively. a oximately $3.6 million Gross Profit. Gross profit decreased $241.7 million, or 30%, to $577.3 million in 2023 from $819.0 million in 2022. As a percentage of net sales, gross profitff 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 manufact ing overhead expense as a percentage of net sales primarily due to reduced sales volumes, partially offsff et by an improvement in material costs as a percentage of net sales. urt ff Operating Income. Operating income decreased $210.4 million, or 40%, to $321.1 million in 2023 from $531.5 million in ing segment attributable to acquisitions completed in 2023 and 2022 was 2022. Operating income forff approximately $(0.6) million and $19.4 million, respectively. The decrease in operating income primarily reflects the . decrease in gross profitff mentioned above the manufact urt a ff Distii ritt bui tion Net Sales. Sales decreased $398.2 million, or 31%, to $889.4 million in 2023 from $1,287.6 million in 2022. This segment accounted for appa roximately 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. oximately $14.1 million In 2023 and 2022, net sales attributable to acquisitions completed in each of those periods was appr and $0.5 million, respectively. a Gross Profit. Gross profit decreased $59.4 million, or 23%, to $195.5 million in 2023 from $254.9 million in 2022. As a as a percentage of net sales, gross profitff was 22.0% in 2023 compared to 19.8% in 2022. The increase in gross profitff percentage of net sales for 2023 is primarily attributed to decreases in labor as a percentage of net sales partly offsff et by increases in material costs as a percentage of net sales. a Operating Income. Operating income in 2023 decreased $46.8 million, or 34%, to $90.1 million froff m $136.9 million in 2022. Operating income forff 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 a Unalloll cated CorCC por rr ate Ett xpeEE nses As presented in Note 16 "Segment Inforff mation" of the Notes to Consolidated Financial Statements included elsewhere in this ate expenses in 2023 decreased $26.7 million, or 27%, to $72.3 million froff m $99.0 million in Form 10-K, unallocated corpor 2022. The decrease in 2023 was mostly attributed to decreases in incentive compensation, wages, profesff and amortization of inventory srr tep-up adjud stments. sional fees ff r LIQUIDITY AND CAPITAL RESOURCES Q Our liquidity as of December 31, 2023 consisted of cash and cash equivalents of $11.4 million and $768.1 million of availabia lity under our credit facility. The Company's primary sources of liquidity are cash floff ws from operations, which includes selling its products and collecting receivabla es, available cash reserves and borrowing capacity availabla e under the 2021 Credit Facility as discussed in Note 7 "Debt" of the Notes to Consolidated Financial Statements. As of December 31, 2023, the Company's existing cash and cash equivalents, cash generated froff m operations, and availabla e borrowings under its 2021 Credit Facility are expected to be sufficff ient to meet anticipated cash needs forff working capital and capital expenditures forff at least the next 12 months, exclusive of any acquisitions, based on its current cash floff w budgets and forecast of short-term and long-term liquidity needs. Principal uses of cash are to suppor t the Company's capital allocation strategy, which includes acquisitions, capital expenditures, dividends and repurchases of the Company’s common stock, among others. t working capia tal demands, meet debt service requirements and suppor u u rr roff m period to period depending on manufact Working capital requirements vary f ing volumes primarily related to the RV, marine, MH and industrial markets we serve, the timing of deliveries, and the payment cycles of customers. In the event that operating cash floff w is inadequate and one or more of the Company's capital resources were to become unavailabla e, the Company would seek to revise its operating strategies accordingly. 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. urt ff 33 ry 2023, the Company utilized availabla e borrowing capacity under the Revolver dued In Februarr satisfy its repayment obligation at maturt Financial Statements included elsewhere in this Form 10-K forff Throughout the course of the year, the Company made payments on the Revolver dued of December 2023. 2027 and cash on hand to ity for the 1.00% Convertible Notes. See Note 7 "Debt" of the Notes to Consolidated further discussion of the 1.00% Convertible Notes. 2027, with the balance repaid in full as In January 2024, the Company utilized availabla e borrowing capaa its acquisition of Sportech, as discussed in Note 17 "Subsu equent Events" of the Notes to Consolidated Financial Statements. city under the Revolver dued 2027 and cash on hand to fund ff As of and forff 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 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 actuat l amounts as of December 31, 2023 and forff the fisff cal period then ended are as follows: Consolidated secured net leverage ratio (12-month period) Consolidated fixed charge coverage ratio (12-month period) Required 2.75 1.50 l Actuat 0.27 3.01 In addition, as of December 31, 2023, the Company's consolidated total net leverage ratio (12-month period) was 2.38. 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. Cash Flows Year Ended December 31, 2023 Compared to 2022 Operatintt g Activtt ities Cash flows froff m operating activities are one of the Company's primary sources of liquidity, representing the net income the Company earned in the reported periods, adjusted forff non-cash items and changes in operating assets and liabia lities. Net 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, subsu tantially offseff t by an increase in depreciation and amortization of $13.7 million and a $98.9 million source of cash from operating assets and liabia lities compared to a $60.7 million use of cash froff m operating assets and liabia lities in the prior period. Investing Activtt ities Net cash used in investing activities decreased $235.0 million, or 73%, to $86.5 million in 2023 from $321.5 million in 2022 capital primarily due to a decrease in cash used in business acquisitions of $223.0 million and a decrease in cash used forff expenditures of $20.9 million, partly offsff et by a $6.2 million decrease in cash received on disposals of property, plant, and equipment. Finaii ncing Activtt ities Net cash floff ws used in financing activities increased $143.3 million to $333.6 million in 2023 compared to $190.3 million in 2022. The increase in cash floff ws 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 dued t by a $58.3 million reduction in stock repurchases in 2023 compared to 2022. 2027, partially offseff See our Form 10-K forff 2022 compared to 2021. the year ended December 31, 2022 for a discussion of cash floff ws for the year ended December 31, Off-Bff alance Sheet Arrangements None. 34 CRITICAL ACCOUNTING POLICIES The preparation of finff ancial statements in conforff mity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affeff ct the reported amounts of assets and liabia lities, the disclosure of contingent assets and liabia lities at the date of the finff ancial statements and the reported amounts of revenues and expenses during the reporting period. The SEC has definff ed a company’s critical accounting policies as those that are most important to the portrayal of its finff ancial condition and results of operations, and which require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Although management believes that its estimates and assumptions are reasonabla e, they are based upon information availabla e when they rent assumptions or conditions. The Company are made. Actual results may differff materially from these estimates under diffeff has identifieff d the following critical accounting policies and estimates: Goodwill and Other Intangible Assets. 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. Goodwill and indefinite-lived intangible assets, representing acquired trademarks, are not amortized but are subject to an annual (or under certain circumstances more frequent) impairment test in the fourth quarter based on their estimated fair value. We test more frequently, if there are indicators of impairment, or whenever such circumstances suggest that the carrying value of goodwill or trademarks may not be recoverabla e. These indicators include a sustained material decline in our share price and market capitalization, a decline in expected future cash floff ws, or a material adverse change in the business climate. A material adverse change in the business climate could result in a material loss of market share or the inability to achieve previously projected revenue growth. ff urt Impairment reviews of goodwill are performed at the reporting unit level. The Company’s reporting units are definff ed as one level below our operating segments, Manufact ing and Distribution, which are the same as our reportabla e segments. In impairment, either a qualitative or quantitative assessment is performed. If the qualitative assessment evaluating goodwill forff r value of the reporting unit is less than its carrying value, the Company indicates it is more likely than not that the faiff performs a quantitative assessment. When estimating reporting unit faiff r value with the quantitative assessment, the Company uses a combination of market and income-based methodologies. The market approach includes a comparison of the multiple of a reporting unit's carrying value to its earnings before interest, taxes, depreciation and amortization with the multiples of similar businesses or guideline companies whose securities are actively traded in the public markets. When calculating the present value of future cash floff ws under the income approach, the Company takes into consideration multiple variables, including forecasted sales volumes and operating income, current industry arr nd economic conditions, and historical results. oach fair value estimate also includes estimates of long-term growth rates and discount rates that are The income appr commensurate with the risks and uncertainty inherent in the respective reporting units and internally-developed forff ecasts. a Impairment reviews of indefinite-lived intangible assets (trademarks) consist of a comparison of the faiff r value of the trademark to its carrying value. Fair value is measured using a relief-from-royalty approach, a form of discounted cash floff w tudies and consideration of method. Estimated royalty rates appl operating margins. Discount rates are derived in a manner similar to what is done in testing goodwill for impairment. ied to projeo cted revenues are based on comparabla e industry s a rr 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. Further, based on the results of the impairment analyses, none of the Company’s reporting units or trademarks were at risk of failing the impairment assessments discussed above that would have a material effeff ct on the Company’s Consolidated Financial Statements forff any period presented. a Business Combinations. From time to time, we may enter into business combinations. We recognize the identifiaff bla e assets acquired and the liabia lities assumed at their fair values as of the date of acquisition. We measure goodwill as the excess of consideration transferred, which we also measure at faiff r values of the identifiaff bla e assets acquired and liabia lities assumed. The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the faiff r values of property, plant and equipment, identifiable intangible assets, contingent consideration and other financial assets and liabia lities. Significant estimates and assumptions include subju ective and/or complex judgments regarding items such as discount rates, customer attrition rates, royalty rates, and other factors, including estimated futff urt e cash floff ws that we expect to generate from the acquired assets. r value, over the net of the acquisition date faiff 35 a The acquisition method of accounting also requires us to refinff e these estimates over a measurement period not to exceed one facts and circumstances that existed as of the acquisition date that, if known, year to reflect new information obtained about would have affected the measurement of the amounts recognized as of that date. If we are required to adjust provisional amounts that we have recorded forff r values of assets and liabia lities in connection with acquisitions, these adjud stments could have a material impact on our financial condition and results of operations. No changes in the year ended December 31, r value estimates of assets acquired and liabilities assumed in acquisitions were material. If the 2023 to provisional faiff ted projeo ctions of the underlying business activity change compared with the assumptions subsu equent actuat and projeo ctions used to develop the acquisition date faiff r value estimates, we could record future impairment charges. 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. l results and upda the faiff u 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. A 100-basis point increase in the underlying SOFR rates would result in oximately $1.3 million, assuming average borrowings during 2023, including the Term additional annual interest cost of appr Loan due 2027, subju ect to variable rates were equal to the amount of such borrowings outstanding as of December 31, 2023, or $129.4 million, excluding deferred finff ancing costs related to the Term Loan dued 2027. a Commodity Volatility The prices of key raw materials, consisting primarily of lauan, gypsum, fibff erglass, particleboard, aluminum, softwoods and hardwoods lumber, resin, and petroleum-based products, are influenced by demand and other factors specific to these commodities as well as general inflationary pressures, including those driven by supply chain and logistical disrupt ions. te in 2023. During periods of volatile Prices of certain commodities have historically been volatile and continued to fluff ctuat commodity prices, we have generally been able to pass both price increases and decreases to our customers in the form of price adjustments. We are exposed to risks durd ing periods of commodity volatility because there can be no assurance futff urt e cost increases or decreases, if any, can be partially or fully passed on to customers, or that the timing of such sales price increases or decreases will match raw material cost increases or decreases. We do not believe that commodity price volatility had a material effeff ct on results of operations for the periods presented. rr ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The inforff mation 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. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Discii losure Contrott ls and ProPP cedures The Company maintains “disclosure controls and procedurd es”, as such term is defined under Securities Exchange Act Rule 13a-15(e) or 15d-15(e), that are designed to ensure that inforff mation required to be disclosed in our Securities Exchange Act of 1934, as amended (the “Exchange Act”) reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such inforff mation is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appr timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedurd es, the Company’s management recognizes that any controls and procedurd es, no matter how well designed and operated, can provide only reasonabla e assurance of achieving the desired control objectives and the Company’s management necessarily is required to appl y its judgment in evaluating the cost-benefitff relationship of possible controls and procedurd es. opriate to allow forff a a 36 Under the supeu rvision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effeff ctiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our Chief Executive Offiff cer and Chief Financial Offiff cer concluded as of the Evaluation Date that our disclosure controls and procedurd es were effeff ctive such that the information relating to the Company, including consolidated subsu idiaries, required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to Company’s management, including our Chief Executive Officer and Chief Financial Offiff cer, as appropriate to allow timely decisions regarding required disclosure. Managea ment’s Annual Report on IntII ertt nal ConCC trol Over Finaii ncial Reporting We are responsible for establishing and maintaining adequate internal control over finff ancial reporting, as defined in RulRR e 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system was designed to provide reasonabla e assurance regarding the fair and reliabla e preparation and presentation of our published finff ancial statements. We continually evaluate our system of internal control over finff ancial reporting to determine if changes are appropriate based upon changes in our operations or the business environment in which we operate. u All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effeff ctive can provide only reasonabla e assurance with respect to financial statement preparation and presentation. Under the supeu rvision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effeff ctiveness of our internal control over finff ancial reporting based on the fraff mework in the 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). This assessment included a review of the documentation of controls, an assessment of the design effect iveness of controls, testing of the operating effeff ctiveness of controls, and a conclusion on this evaluation. Based on our assessment, we have concluded that our internal control over finff ancial reporting was effeff ctive as of December 31, 2023. ff The Company’s independent registered public accounting firff m, Deloitte & Touche LLP, audited our internal control over financial reporting as of December 31, 2023, as stated in their report in the section entitled “Report of Independent Registered Publu ic Accounting Firm” included elsewhere in this Form 10-K, which expresses an unqualifieff d opinion on the effect iveness of the Company’s internal control over finff ancial reporting as of December 31, 2023. ff Changes in i ii ntii ertt nal control over finaii ncial reporting There have been no changes in our internal control over finff ancial reporting that occurred durd ing the fourth quarter ended December 31, 2023 or subsu equent to the date the Company completed its evaluation, that have materially affeff cted, or are reasonabla y likely to materially affeff ct, our internal control over finff ancial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS a Not appl icable. 37 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATRR E GOVERNANCE PART III Directors of the Companyp y our 2024 The inforff mation required by this item with respect to directors is set forff Annual Meeting of Shareholders to be filed with the SEC pursuant to Regulation 14A (the “2024 Proxy Statement”) under the captions “Election of Directors” and “Delinquent Section 16(a) Reports,” which inforff mation is hereby incorpor ated herein by reference. th in our definitive Proxy Statement forff r Executive Offiff cers of the Registrant g The inforff mation required by this item is set forth under the caption “Executive Officers of the Company” in Part I of this Annual Report on Form 10-K. Audit Committee Information on our Audit Committee is contained under the caption “Audit Committee” in the Company's 2024 Proxy Statement and is incorporated herein by reference. Code of Ethics and Business Conduct icable to all employees. Our Code of Ethics and We have adopted a Code of Ethics and Business Conduct Policy appl Business Conduct Policy is availabla e on the Company’s web site at www.patrickind.com under “For Investors”. We intend to post on our web site any subsu tantive amendments to, or waivers from, our Code of Ethics and Business Conduct Policy as well as our Corporate Governance Guidelines. We will provide shareholders with a copy of these policies without charge rate Secretary arr upon written request directed to the Company’s Corpor t the Company’s address. a Corporate Governance p Information on our corporate governance practices is contained under the caption “Corporate Governance Highlights” in the Company's 2024 Proxy Statement and incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The inforff mation required by this item is set forth in our 2024 Proxy Statement under the caption “Executive Compensation," "Compensation Committee Interlocks and Director Participation," and "Compensation Committee Report," and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The inforff mation required by this item is set forth in our 2024 Proxy Statement under the captions “Equity Compensation Plan ated herein by Information” and “Security Ownership of Certain Beneficff reference. ial Owners and Management,” and is incorpor r ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The inforff mation required by this item is set forth in our 2024 Proxy Statement under the captions “Related Party Transactions” and “Corpor ate Governance Highlights”, and is incorporated herein by reference. r ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The inforff mation required by this item is set forth in our 2024 Proxy Statement under the heading “Independent Publu ic Accountants,” and is incorpor ated herein by reference. r 38 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES PART IV (a) (1) The finff ancial statements listed in the accompanying Index to the Financial Statements on page F-1 of the separate finff ancial section of this Report are incorporated herein by reference. (3) The exhibits required to be filff ed as part of this Annual Report on Form 10-K are listed under (c) below. (c) Exhibits Exhibit Number 3.1 3.2 3.3 4.1 4.2 4.3 4.4** 10.1 10.2* 10.3* 10.4* 10.5* 10.6* 10.7* 10.8 10.9 Articles of Incorporation of Patrick Industries, Inc. (filff ed as Exhibit 3.1 to the Company’s r Form 10-K filff ed on March 30, 2010 and incorpor ated herein by reference). Exhibits Amendment to the Articles of Incorporation of Patrick Industries, Inc. dated June 5, 2018 (filed ated herein as Exhibit 3.2 to the Company's Form 10-K fileff d on February 2rr by reference). 8, 2019 and incorpor r Amended and Restated By-laws of Patrick Industries, Inc. (filff ed as Exhibit 3.1 to the Company's Form 8-K filed on May 8, 2020 and incorpor ated herein by reference). r Indenturt e (including Form of Note), dated as of September 17, 2019, among Patrick Industries, Inc., the guarantors froff m time to time party thereto and U.S. Bank, National Association, as Trusr incorporated herein by reference). tee (filed as Exhibit 4.1 to the Company's Form 8-K filed on September 18, 2019 and Indenturt e (including Form of Note), dated as of April 20, 2021, among Patrick Industries, Inc., the guarantors froff m time to time party thereto and U.S. Bank, National Association, as Trusr tee (filed as Exhibit 4.1 to the Company's Form 8-K filed on April 26, 2021 and incorpor herein by reference). ated r Indenturt e (including Form of Note) with respect to the Company's 1.75% Convertible Senior Notes dued Bank National Association, as trusr December 13, 2021 and incorporated herein by reference) 2028, dated as of December 13, 2021. between Patrick Industries, Inc. and U.S. tee. (filff ed as Exhibit 4.1 to the Company's Form 8-K filed on Description of the Company’s common stock. Patrick Industries, Inc. 2009 Omnibus Incentive Plan (filed as Appendix A to the Company’s revised Definff incorporated herein by reference). itive Proxy Statement on Scheduld e 14A filed on October 20, 2009 and Form of Employment Agreement with Executive Officers (filed as Exhibit 10.2 to the ated herein by reference). Company’s Form 10-K fileff d on March 30, 2010 and incorpor r Form of Non-Qualifieff d Stock Option Agreement (filed as Exhibit 10.3 to the Company’s Form 10-K filff ed on Februar ated herein by reference). ry 24, 2023 and incorpor r Form of Offiff cer and Employee Time-Based Restricted Share Award (filed as Exhibit 10.4 to ated herein by reference). the Company’s Form 10-K fileff d on February 2rr 4, 2023 and incorpor rr Form of Offiff cer and Employee Time-Based Restricted Share Award and Performance Contingent Restricted Share Award (filff ed as exhibit 10.5 to the Company's Form 10-K fileff d on Februarr ated herein by reference). ry 24, 2023 and incorpor rr Form of Non-Employee Director Restricted Share Award (filff ed as Exhibit 10.6 to the Company’s Form 10-K fileff d on February 2rr 4, 2023 and incorpor ated herein by reference). rr Form of Stock Appreciation Rights Agreement (filed as Exhibit 10.7 to the Company’s Form 10-K filff ed on Februar ated herein by reference). ry 24, 2023 and incorpor r First amendment to Fourth Amended and Restated Credit Agreement dated August 11, 2022 by and among the Company, the Guarantors, the lenders from time to time a party thereto and Wells Fargo Bank, National Association (filed as Exhibit 10.1 to the Company's Form 8-K filff ed on August 15, 2022 and incorpor ated herein by reference). rr Base Convertible Bond Hedge Transaction Confirff mation, dated as of December 7, 2021, by and between Patrick Industries. Inc. and Bank of America, N.A. (filed as Exhibit 10.1 to the Company's Form 8-K filed on December 13, 2021 and incorpor ated herein by reference) r 39 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21* 21** 23.1** 31.1** 31.2** 32** 97** Base Convertible Bond Hedge Transaction Confirff mation, dated as of December 7, 2021, by and between Patrick Industries. Inc. and Nomura Global Financial Products Inc. (filed as Exhibit 10.2 to the Company's Form 8-K fileff d on December 13, 2021 and incorpor by reference) ated herein r Base Convertible Bond Hedge Transaction Confirff mation, dated as of December 7, 2021, by and between Patrick Industries. Inc. and Wells Fargo Bank, National Association. (filed as Exhibit 10.3 to the Company's Form 8-K fileff d on December 13, 2021 and incorpor by reference) ated herein r Base Issuer Warrant Transaction Confirff mation, dated as of December 7, 2021, by and between Patrick Industries. Inc. and Bank of America, N.A. (filed as Exhibit 10.4 to the Company's Form 8-K filff ed on December 13, 2021 and incorpor rated herein by referff ence) Base Issuer Warrant Transaction Confirff mation, dated as of December 7, 2021, by and between Patrick Industries. Inc. and Nomura Global Financial Products Inc. (filed as Exhibit 10.5 to the Company's Form 8-K filed on December 13, 2021 and incorpor rated herein by referff ence) Base Issuer Warrant Transaction Confirff mation, dated as of December 7, 2021, by and between Patrick Industries. Inc. and Wells Fargo Bank, National Association. (filed as Exhibit 10.6 to ated herein by reference) the Company's Form 8-K filed on December 13, 2021 and incorpor r Additional Convertible Bond Hedge Transaction Confirff mation, dated as of December 9, 2021, by and between Patrick Industries, Inc. and Bank of America, N.A. (filed as Exhibit 10.7 to the Company's Form 8-K filed on December 13, 2021 and incorpor rated herein by referff ence) Additional Convertible Bond Hedge Transaction Confirff mation, dated as of December 9, 2021, by and between Patrick Industries, Inc. and Nomura Global Financial Products Inc. (filed as Exhibit 10.8 to the Company's Form 8-K fileff d on December 13, 2021 and incorpor by reference) ated herein r Additional Convertible Bond Hedge Transaction Confirff mation, dated as of December 9, 2021, by and between Patrick Industries, Inc. and Wells Fargo Bank, National Association. (filed as Exhibit 10.9 to the Company's Form 8-K fileff d on December 13, 2021 and incorpor ated herein by reference) r Additional Issuer Warrant Transaction Confirff mation, dated as of December 9, 2021, by and between Patrick Industries, Inc. and Bank of America, N.A. (filed as Exhibit 10.10 to the rated herein by referff ence) Company's Form 8-K filed on December 13, 2021 and incorpor Additional Issuer Warrant Transaction Confirff mation, dated as of December 9, 2021, by and between Patrick Industries, Inc. and Nomura Global Financial Products Inc. (filed as Exhibit 10.11 to the Company's Form 8-K filed on December 13, 2021 and incorpor reference) rated herein by Additional Issuer Warrant Transaction Confirff mation, dated as of December 9, 2021, by and between Patrick Industries, Inc. and Wells Fargo Bank, National Association. (filed as Exhibit 10.12 to the Company's Form 8-K filed on December 13, 2021 and incorpor reference) rated herein by Employment Agreement with Executive Chairman of the Board of Directors. (filed as Exhibit 10.1 to the Company's Form 8-K filed on January 10, 2022 and incorpor reference) rated herein by Subsu idiaries of the Registrant. Consent of Deloitte & Touche LLP. Certificff ation pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002 by Chief Executive Offiff cer. Certificff ation pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002 by Chief Financial Offiff cer. Certificff ation pursuant to 18 U.S.C. Section 1350. Incentive Compensation Recovery Policy 40 XBRL Exhibits. Interactive Data Files. The folff lowing materials are filed electronically with this Annual Report on Form 10-K: 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Schema Document 101.CAL Inline XBRL Taxonomy Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Definff ition Linkbase Document 101.LAB Inline XBRL Taxonomy Label Linkbase Document 101.PRE Inline XBRL Taxonomy Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document Attached as Exhibits 101 to this report are the folff 10-K forff the year ended December 31, 2023 formatted in XBRL (“eXtensible Business Reporting Language”): (i) the Consolidated Balance Sheet; (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Shareholders’ Equity; and (v) the Consolidated Statements of Cash Flows, and the related Notes to these financial statements in detail tagging format. lowing financial statements froff m the Company’s Annual Report on Form *Management contract or compensatory plan or arrangement. **Filed herewith. ***Management contract or compensatory plan or arrangement and fileff d herewith. All other financial statement schedules are omitted because they are not applicable or the required inforff mation is immaterial or is shown in the Notes to Consolidated Financial Statements. ITEM 16. FORM 10-K SUMMARY None. 41 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duld y authorized SIGNATURES Date: February 2rr y , 9, 2024 PATRICK INDUSTRIES, INC. By: /s/ Andy L. Nemeth Andy L. Nemeth Chief Executive Offiff cer Pursuant to the Requirements of the Securities Exchange Act of 1934, this report has been signed below by the folff persons on behalf of the registrant and in the capacities and on the dates indicated. lowing Signature /s/ Andy L. Nemeth Andy L. Nemeth /s/ Matthew S. Filer Matthew S. Filer /s/ Joseph M. Cerulrr Joseph M. Cerulli li /s/ Todd M. Cleveland Todd M. Cleveland /s/ John A. Forbes John A. Forbes /s/ Michael A. Kitson Michael A. Kitson /s/ Pamela R. Klyn Pamela R. Klyn /s/ Derrick B. Mayes Derrick B. Mayes /s/ Denis G. Suggs Denis G. Suggs /s/ M. Scott Welch M. Scott Welch Title Chief Executive Offiff cer (Principal Executive Officer) Director Interim Executive Vice President Finance, Chief Financial Offiff cer and Treasurer (Principal Financial and Accounting Officer) Date , y ry 29, 2024 Februarr Februarr , ry 29, 2024 y Director Februarr , ry 29, 2024 y Chairman of the Board February 2rr y , 9, 2024 Director Director Director Director Director Februarr , ry 29, 2024 y Februarr , ry 29, 2024 y Februarr , ry 29, 2024 y Februarr , ry 29, 2024 y Februarr , ry 29, 2024 y Lead Independent Director Februarr , ry 29, 2024 y 42 PATRICK INDUSTRIES, INC. Index to the Financial Statements Report of Independent Registered Publu ic Accounting Firm, Deloitte & Touche LLP (Firm ID No. 34) Financial Statements: Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Shareholders' Equity Notes to Consolidated Financial Statements F-2 F-4 F-5 F-6 F-7 F-8 F-9 F-1 Report of Independent Registered Public Accounting Firm To the shareholders and the Board of Directors of Patrick Industries, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Patrick Industries, Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash floff ws, forff each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "finff ancial statements"). We also have audited the Company’s internal control over finff ancial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the finff ancial statements referred to above rly, in all material respects, the finff ancial position of the present faiff Company as of December 31, 2023 and 2022, and the results of its operations and its cash floff ws for each of the three years in the period ended December 31, 2023, in conforff mity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effeff ctive internal control over finff ancial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. a Basis forff Opinions The Company’s management is responsible for these financial statements, for maintaining effeff ctive internal control over its assessment of the effeff ctiveness of internal control over finff ancial reporting, included in the financial reporting, and forff accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these finff ancial statements and an opinion on the Company’s internal control over finff ancial reporting based on our audits. We are a public accounting firff m registered with the Publu ic Company Accounting Oversight Board (United States) eral securities laws (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. fedff and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform whether the financial statements are free of material misstatement, whether the audits to obtain reasonabla e assurance about due to error or fraff ud, and whether effeff ctive internal control over finff ancial reporting was maintained in all material respects. a Our audits of the finff ancial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether dued to error or fraff ud, and performing procedurd es to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over finff ancial reporting included obtaining an understanding of internal control over finff ancial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedurd es as we considered necessary in the circumstances. We believe that our audits provide a reasonabla e basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over finff ancial reporting is a process designed to provide reasonabla e assurance regarding the reliabia lity of financial reporting and the preparation of finff ancial statements for external purpos es in accordance with generally accepted accounting principles. A company’s internal control over finff ancial reporting includes those policies and procedurd es that (1) pertain to the maintenance of records that, in reasonabla e detail, accurately and faiff rly refleff ct the transactions and dispositions of the assets of the company; (2) provide reasonabla e assurance that transactions are recorded as necessary to permit preparation of finff ancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the finff ancial statements. r F-2 Because of its inherent limitations, internal control over finff ancial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to futff urt e periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedurd es may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising froff m the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subju ective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the finff ancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Goodwill – FibFF erglr asll s Reportingii Unit – Referff to Notes 1 and 6 to t tt hett Finaii ncial StaSS tementstt Critical Audit MatMM ter Description The Company’s evaluation of goodwill for impairment involves the comparison of the faiff r value of each reporting unit to its carrying value. When calculating the present value of futff urt e cash floff ws under the income approach, the Company takes into consideration forff ecasted sales volumes, operating income, and a discount rate. The Company uses a market approach as a secondary valuation method to evaluate the income approach. The market approach includes a comparison of multiples of earnings before interest, taxes, depreciation, and amortization (EBITDA) for the reporting unit to similar businesses or guideline companies whose securities are actively traded in public markets. The estimated faiff r value of the Company’s reporting unit was determined to exceed the carrying value for the year end December 31, 2023, and so no impairment was recognized. the Fiberglass Reporting Unit as a critical audit matter because of the significant judgments made We identifieff d goodwill forff rence between its fair value and by management to estimate the faiff carrying value. This required a high degree of auditor judgment and an increased extent of effoff rt, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonabla eness of management’s estimates and assumptions related to selection of the discount rate and forff ecasts of future revenue and operating margin, specifically due to the sensitivity of the Fiberglass Reporting Unit’s operations. r value of the Fiberglass Reporting Unit and the diffeff How thett Critical Audit MatMM ter WasWW Addrdd essed in thett Audit Our audit procedurd es related to the discount rate and forff ecasts of sales and operating income used by management to estimate the faiff r value of certain reporting units included the following, among others: • We tested the effeff ctiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the Fiberglass Reporting Unit related to management’s selection of the discount rates and forecasts of sales and operating income. • We evaluated management’s ability to accurately forff ecast sales and operating income by comparing actuat l results to management’s historical forecasts. • We evaluated the reasonabla eness of management’s sales and operating income assumptions included in the income approach model, and the extent to which forff ecast projeo ction risk had been contemplated in the selection of the discount rate by comparing the forecasts to historical sales and operating income. • With the assistance of our fair value specialists, we evaluated the reasonabla eness of the valuation methodology and discount rate by testing the source information underlying the determination of the discount rate, the mathematical accuracy of the calculations and developing a range of independent estimates and comparing those to the discount rate selected by management. /s/ Deloitte & Touche LLP Chicago, Illinois Februar ry 29, 2024 We have served as the Company's auditor since 2019. F-3 Year Ended December 31, 2022 4,881,872 3,821,934 1,059,938 $ $ 2023 3,468,045 2,685,812 782,233 143,921 299,418 78,694 522,033 260,200 68,942 191,258 48,361 142,897 6.64 6.50 21,519 22,025 $ $ $ 163,026 327,513 73,229 563,768 496,170 60,760 435,410 107,214 328,196 14.82 13.49 22,140 24,471 $ $ $ 2021 4,078,092 3,276,898 801,194 139,606 253,547 56,329 449,482 351,712 57,890 293,822 68,907 224,915 9.87 9.63 22,780 23,355 PATRICK INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME ($ in thousands except per share data) NET SALES Cost of goods sold GROSS PROFIT Operating Expenses: Warehouse and delivery Selling, general and administrative Amortization of intangible assets Total operating expenses OPERATRR ING INCOME Interest expense, net Income before income taxes Income taxes NET INCOME BASIC EARNINGS PER COMMON SHARE DILUTED EARNINGS PER COMMON SHARE Weighted average shares outstanding - Basic Weighted average shares outstanding - Diluted See accompanying Notes to Consolidated Financial Statements. $ $ $ $ F-4 PATRICK INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME in thousands) NET INCOME Other comprehensive income (loss), net of tax: Change in unrealized gain on hedge derivatives Foreign currency translation gain (loss) Other Total other comprehensive income (loss) COMPREHENSIVE INCOME See accompanying Notes to Consolidated Financial Statements. Year Ended December 31, 2022 2023 2021 $ 142,897 $ 328,196 $ 224,915 — (75) (229) (304) 142,593 $ 757 (97) 873 1,533 329,729 $ 4,131 142 (449) 3,824 228,739 $ F-5 PATRICK INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS ($ in thousands except share data) ASSETS Current Assets Cash and cash equivalents Trade and other receivabla es, net Inventories Prepaid expenses and other Total current assets Property, plant and equipment, net Operating lease right-of-use-assets Goodwill Intangible assets, net Other non-current assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Current maturities of long-term debt Current operating lease liabia lities Accounts payable Accruer d liabia lities Total current liabilities Long-term debt, less current maturities, net Long-term operating lease liabia lities Deferred tax liabia lities, net Other long-term liabilities TOTAL LIABILITIES COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY Preferff red stock, no par value; authorized 1,000,000 shares; none issued or outstanding Common stock, no par value; authorized 40,000,000 shares; issued and outstanding 2023 - 22,160,608 shares; issued and outstanding 2022 - 22,212,360 shares Accumulated other comprehensive loss Retained earnings TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY See accompanying Notes to Consolidated Financial Statements. F-6 December 31, 2023 2022 $ $ $ 11,409 163,838 510,133 49,251 734,631 353,625 177,717 637,393 651,153 7,929 2,562,448 7,500 48,761 140,524 111,711 308,496 1,018,356 132,444 46,724 11,091 1,517,111 22,847 172,890 667,841 46,326 909,904 350,572 163,674 629,263 720,230 8,828 2,782,471 7,500 44,235 142,910 172,595 367,240 1,276,149 122,471 48,392 13,050 1,827,302 — — 203,258 (999) 843,078 1,045,337 2,562,448 $ 197,003 (695) 758,861 955,169 2,782,471 $ $ $ $ PATRICK INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands) CASH FLOWS FROM OPERATRR ING ACTIVITIES Net income Adjud stments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of convertible notes debt discount Stock-based compensation expense Deferred income taxes (Gain) loss on sale of property, plant and equipment Other Change in operating assets and liabia lities, net of acquisitions of businesses: Trade and other receivabla es, net Inventories Prepaid expenses and other assets Accounts payable, accrued liabia lities and other Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant, and equipment Proceeds froff m sale of property, equipment, facility and other Business acquisitions, net of cash acquired Purchase of intangible assets and other investing activities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Term debt borrowings Term debt repayments Borrowing on revolver Repayments on revolver Repayments of convertible notes Proceeds froff m senior notes offeff ring Proceeds froff m convertible notes offeff Purchase of convertible notes hedges Proceeds froff m sale of warrants Cash dividends paid to shareholders Stock repurchases under buyback program Taxes paid forff Payment of deferff Payment of contingent consideration froff m business acquisitions Proceeds froff m exercise of common stock options Other finff ancing activities share-based payment arrangements red finff ancing costs ring Net cash (used in) provided by finff ancing activities (Decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year See accompanying Notes to Consolidated Financial Statements. $ F-7 Year Ended December 31, 2022 2021 2023 $ 142,897 $ 328,196 $ 224,915 144,543 1,072 19,429 (591) 585 1,842 8,923 162,181 (3,931) (68,278) 408,672 (58,987) 1,362 (25,859) (3,061) (86,545) — (7,500) 488,440 (568,728) (172,500) — — — — (42,140) (18,808) (12,132) — (1,460) 1,413 (150) (333,565) (11,438) 22,847 ,, 11,409 $ 130,757 1,851 21,751 (9,349) (5,560) 4,785 26,056 (11,896) 20,123 (94,976) 411,738 (79,883) 7,620 (248,899) (305) (321,467) — (7,500) 839,436 (894,147) — — — — — (32,869) (77,117) (10,227) (2,464) (5,580) 195 — (190,273) (100,002) 122,849 ,, 22,847 $ 104,808 7,987 22,887 (3,943) 583 4,971 (14,350) (232,465) (13,114) 149,851 252,130 (64,804) 197 (508,127) (2,000) (574,734) 58,750 (6,875) 832,500 (972,500) — 350,000 258,750 (57,443) 43,677 (27,024) (48,940) (17,814) (15,745) (1,600) 4,950 — 400,686 78,082 44,767 ,, 122,849 7 5 5 , 7 6 7 $ 4 3 7 , 3 1 5 $ ) 3 9 6 , 3 4 ( 6 9 1 , 8 2 3 ) 0 6 1 , 3 3 ( 3 3 5 , 1 ) 3 8 9 , 6 7 ( 5 9 1 ) 7 2 2 , 0 1 ( 1 5 7 , 1 2 9 6 1 , 5 5 9 7 9 8 , 2 4 1 ) 7 2 3 , 2 4 ( ) 4 0 3 ( 3 1 4 , 1 ) 8 0 8 , 8 1 ( ) 2 3 1 , 2 1 ( 9 2 4 , 9 1 5 7 9 , 5 1 6 9 1 , 8 2 3 ) 0 6 1 , 3 3 ( — ) 4 8 8 , 5 6 ( — — — — — — $ 1 6 8 , 8 5 7 7 9 8 , 2 4 1 ) 7 2 3 , 2 4 ( — ) 3 5 3 , 6 1 ( $ 7 3 3 , 5 4 0 , 1 $ 8 7 0 , 3 4 8 $ — — — — — — — — — — — — — — — — — — — — — — — — — — — — 3 3 5 , 1 — — — — $ ) 5 9 6 ( — — ) 4 0 3 ( — — — — $ ) 9 9 9 ( $ $ — — — — — — — — — — — — — — — — 1 4 4 , 9 5 5 5 1 9 , 4 2 2 ) 6 3 8 , 7 2 ( 4 2 8 , 3 ) 0 4 9 , 8 4 ( — 0 5 9 , 4 1 1 2 , 0 1 ) 5 1 8 , 7 1 ( 7 8 8 , 2 2 ) 7 8 8 , 2 4 ( 7 7 6 , 3 4 0 3 1 , 5 3 l a t o T — — — — — — — $ 4 1 2 , 0 6 3 5 1 9 , 4 2 2 ) 6 3 8 , 7 2 ( — ) 3 9 2 , 4 2 ( ) 6 6 2 , 9 1 ( $ — — — — ) 0 5 5 , 1 2 ( 0 5 5 , 1 2 — — 4 2 8 , 3 — — — — — — — — — $ ) 8 2 2 , 2 ( $ — — — ) 8 6 3 ( ) 1 7 2 ( — — — — ) 7 8 8 , 2 4 ( 7 7 6 , 3 4 0 3 1 , 5 3 8 6 6 , 9 5 ) 8 6 6 , 9 5 ( d e n i a t e R s g n i n r a E y r u s a e r T k c o t S e v i s n e h e r p m o C ) s s o L ( e m o c n I - n i - d i a P l a t i p a a C n o m m o C k c o t S r e h t O d e t a l u m u c c A l a n o i t i d d A $ ) 2 5 0 , 6 ( $ 7 8 3 , 4 2 $ 2 9 8 , 0 8 1 $ — — — ) 9 2 7 , 2 ( ) 3 1 0 , 2 ( 0 5 9 , 4 1 1 2 , 0 1 ) 5 1 8 , 7 1 ( 7 8 8 , 2 2 — — — — — — — 5 9 1 ) 9 9 0 , 1 1 ( ) 7 2 2 , 0 1 ( 1 5 7 , 1 2 $ 3 8 3 , 6 9 1 $ — — — ) 5 5 4 , 2 ( 3 1 4 , 1 ) 2 3 1 , 2 1 ( 9 2 4 , 9 1 $ 3 0 0 , 7 9 1 $ $ 8 5 2 , 3 0 2 $ 8 - F Y T I U Q E ' S R E D L O H E R A H S F O S T N E M E T A T S D E T A D I L O S N O C . C N I , S E I R T S U D N I K C I R T A P e s i c r e x e d n a g n i t s e v e h t o t d e t a l e r s t n e m y a p x a t r o ff f s e r a h s f o e s a h c r u p e R n o i t a n i b m o c s s e n i s u b a h t i w n o i t c e n n o c n i s e r a h s f o e c n a u s s I s n o i t p o k c o t s n o m m o c f o e s i c r e x e n o p u s e r a h s f o e c n a u s s I e s n e p x e n o i t a s n e p m o c d e s a b - k c o t S s t n a r g d e s a b - e r a h s f o 3 2 9 , 1 1 $ f o x a t f o t e n , e c n a u s s i e t o n e l b i t r e v n o c f o t n e n o p m o c y t i u q E 6 5 5 , 4 1 $ f o x a t f o t e n , s e g d e h s e t o n e l b i t r e v n o c f o e s a h c r u P s t n a r r a w f o e l a s m o r ff f s d e e c o r P e s i c r e x e d n a g n i t s e v e h t o t d e t a l e r s t n e m y a p x a t r o ff f s e r a h s f o e s a h c r u p e R s n o i t p o k c o t s n o m m o c f o e s i c r e x e n o p u s e r a h s f o e c n a u s s I d n a g n i t s e v e h t o t d e t a l e r s t n e m y a p x a t r o ff f s e r a h s f o e s a h c r u p e R s n o i t p o k c o t s n o m m o c f o e s i c r e x e n o p u s e r a h s f o e c n a u s s I m a r g o r p k c a b y u b r e d n u s e s a h c r u p e r e r a h S x a t f o t e n , e m o c n i e v i s n e h e r p m o c r e h t O e s n e p x e n o i t a s n e p m o c d e s a b - k c o t S s t n a r g d e s a b - e r a h s f o e s i c r e x e 3 2 0 2 , 1 3 r e b m e c e D e c n a l a B . s t n e m e t a t S l a i c n a n i F d e t a d i l o s n o C o t s e t o N g n i y n a p m o c c a e e S e s n e p x e n o i t a s n e p m o c d e s a b - k c o t S 2 2 0 2 , 1 3 r e b m e c e D e c n a l a B s t n a r g d e s a b - e r a h s f o d e r a l c e d s d n e d i v i D e m o c n i t e N m a r g o r p k c a b y u b r e d n u s e s a h c r u p e r e r a h S x a t f o t e n , e m o c n i e v i s n e h e r p m o c r e h t O 6 0 - 0 2 0 2 U S A f o n o i t p o d a f o t c a p m I 1 2 0 2 , 1 3 r e b m e c e D e c n a l a B d e r a l c e d s d n e d i v i D e m o c n i t e N m a r g o r p k c a b y u b r e d n u s e s a h c r u p e r k c o t S x a t f o t e n , s s o l e v i s n e h e r p m o c r e h t O k c o t s y rr r u s a e r t f o t n e m e r i t e R ) a t a d e r a h s t p e c x e , s d n a s u o h t n i $ ( 1 2 0 2 , 1 y r a u n a J e c n a l a B d e r a l c e d s d n e d i v i D e m o c n i t e N PATRICK INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business urt e and distribution of component Patrick Industries, Inc. (“Patrick” or the “Company”) operations consist of the manufact products and materials for use primarily by the recreational vehicle (“RV”), marine, manufact urt ed housing (“MH”) and industrial markets for customers throughout the United States and Canada. As of December 31, 2023, the Company maintained 179 manufacff ilities located in 23 states with a small presence in Mexico, China and Canada. Patrick operates in two business segments: Manufacff turing plants and 62 distribution facff turing and Distribution. ff ff Principles of Consolidation The accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of Patrick and its wholly owned subsu idiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conforff mity with U.S. GAAP requires management to make estimates and assumptions that affeff ct the amounts reported in the consolidated financial statements and accompanying notes. Estimates include the valuation of goodwill and indefinite-lived intangible assets, the valuation of long-lived assets, the allowance forff doubtful accounts, excess and obsolete inventories, assets acquired and liabia lities assumed in a business combination, the valuation of estimated contingent consideration, deferred tax asset valuation allowances, and certain accruer d liabia lities. Actuat r froff m the amounts reported. l results could diffeff Revenue Recognition ff The Company is a major manufacturt er and distributor of component products and materials serving original equipment manufact urt ers and other customers in the RV,RR marine, MH, and industrial industries. Revenue is recognized when or as control of the promised goods transferff s to the Company's customers in an amount that reflects the consideration the Company those goods. The Company’s contracts typically consist of a single performance expects to be entitled to in exchange forff obligation to manufacff ture and provide the promised goods. To the extent a contract is deemed to have multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation using the standalone selling price of each distinct good in the contract. The transaction price for contracts may include reductions to the transaction price forff estimated volume discounts and rebates and other customer incentives. ff urt Manufact ing segment revenue is recognized when control of the products transferff s to the customer which is the point when the customer gains the abia lity to direct the use of and obtain substantially all the remaining benefitff s froff m the asset, which is generally upon delivery orr shipment of goods in certain circumstances. In limited circumstances, where the products are customer specific with no alternative use to the Company, and the Company has a legally enforceable right to payment forff performance to date with a reasonabla e margin, revenue is recognized over the contract term based on the cost-to- cost method. However, the finff ancial impact of these contracts is immaterial considering the short production cycles and limited inventory drr f goods, or upon ays on hand. u Distribution segment revenue from product sales is recognized on a gross basis upon f goods at which point control transfers to the customer. The Company acts as a principal in such arrangements because it controls the o the customer. The Company uses direct shipment arrangements with certain vendors and promised goods before delivery t t its warehouses. The Company u suppl is the principal in the transaction and recognizes revenue for direct shipment arrangements on a gross basis. Our role as principal in our distribution sales is generally characterized by (i) customers entering into contracts with the Company, not the vendor; (ii) our obligation to pay the vendor irrespective of our ability to collect from the customer; (iii) our discretion in iers to deliver products to its customers without having to physically hold the inventory arr shipment or delivery orr u rr F-9 determining the price of the good provided to the customer; (iv) our title to the goods before the customer receives or accept the goods; and (v) our responsibility for the quality and condition of goods delivered to the customer. Sales and other taxes collected concurrent with revenue-producing activities are excluded froff m net sales. The Company records freff related to these customer-billed freff xpenses. and delivery err ight billed to customers in net sales. The corresponding costs incurred forff ight costs are accounted for as costs to fulfillff shipping and handling the contract and are included in warehouse The Company’s contracts across each of its businesses typically do not result in situations where there is a time period greater than one year between performance under the contract and collection of the related consideration. The Company does not account for a significff ant finff ancing component when the Company expects, at contract inception, that the period between the Company's transfer of a promised good or service to a customer and the customer’s payment forff that good or service will be one year or less. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the incurred costs that the Company otherwise would have capitalized is one year or less. These costs, representing primarily sales commissions, are included in selling, general and administrative expenses. the transaction price being allocated to the remaining performance The Company does not disclose information about obligations at period end, as the Company does not have material contracts that have original expected durations of more than one year. a Contract liabia lities, representing upfroff nt payments from customers received prior to satisfying performance obligations, were immaterial in all periods presented and changes in contract liabilities were immaterial in all periods presented. Costs and Expenses Cost of goods sold includes material costs, direct and indirect labor charges, inspection costs, internal transfer costs, receiving costs, and other costs. a , depreciation, overhead expenses, inbound freight Warehouse and delivery err distribution operations and delivery crr xpenses include salaries and wages, building rent and insurance, and other overhead costs related to osts related to the shipment of finished and distributed products to customers. Stock Based Compensation a eciation rightght a (s (“SARS”)) awa drds as of thhe ggran dt dat be byy a lppl Compensation expense related to the fair value of restricted stock awards as of the grant date is calculated based on the Company’s closing stock price on the date of grant. In addition, the Company estimates the fair value of all stock option and stock appr yiyi gng hthe Blla kck-S hch loles optiion-priiciingg m dodell. hThe use of hthiis valluatiion m dod lel iin lvolves assump itions hthat are je judgmudgmentall a dnd hihighlghlyy sen isi itiv ie in thhe ddetermiinatiion of compensatiion lvolatilityility of hthe Compa yny's common expense, iin lcl diudi gng hthe expect ded optiion term, didi ividde dnd yiyi leldd, stockk. Expect ded lvolatilityility of hthe Compa yny’s common sto kck. Thhe expect ded term of optiions andd SARS represents thhe pe iri dod of itime hthat hthe optiions andd SAR gS grant ded are expect ded to bbe outstandidi gng babasedd o hn hiisto iri ield curve in effect at the time instruments of a similar term. New shares are issued upon exercise of options. Forfeitures of stock based of grant forff compensation are recognized as incurred. lvolatiliilitiies t kak ie into considideratiion thhe hihistoriic lal lcal Companyy tre dnds. Thhe iri ksk fre ie interest rat ie i bs bas ded on hthe U.S. Tre sa ury yrr iri ksk-fre ie interest rate a dnd Earnings Per Common Share Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income availabla e forff diluted shares (calculated as net income plus the afteff r-tax effect of interest on potentially dilutive convertible notes, as definff ed by Accounting Standards Update ("ASU") 2020-06, as adopted in 2022) by the weighted-average number of common shares outstanding, plus the weighted-average impact of potentially dilutive convertible notes as defined by ASU 2020-06, plus the dilutive effect of stock options, SARS, and certain restricted stock awards (collectively, “Common Stock Equivalents”). The dilutive effecff t of Common Stock Equivalents is calculated under the treasury s tock method using the average market price for the period. rr Common Stock Equivalents are not included in the computation of diluted earnings per common share if their effect would F-10 be anti-dilutive. See Note 12 "Earnings Per Common Share" forff common share. the calculation of both basic and diluted earnings per Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Trade and Other Receivables to the Company from its normal business activities. In assessing the Trade receivabla es consist primarily of amounts dued carrying value of its trade receivabla es, the Company estimates the recoverabia lity by making assumptions based on historical and forff ward-looking factors, such as historical and anticipated customer performance, current overall and industry-rr specific economic conditions, historical write-off and collection experience, the level of past-dued amounts, and specific risks io. Other receivabla es consist of employee advances, insurance claims, amounts owed identifieff d in the trade receivabla es portfolff from vendors pertaining to importation costs, and other miscellaneous items. ($ in thousands) Trade receivables Other receivabla es Allowance forff Total doubtful accounts Inventories As of December 31 2023 2022 $ $ 136,796 31,046 (4,004) 163,838 $ $ 144,301 30,787 (2,198) 172,890 Inventories are generally stated at the lower of cost (firff st-in, first-out method or, forff method) and net realizable value. Based on the inventory arr writes down the carrying value to net realizable value where appropriate. The Company reviews inventory orr records provisions for excess and obsolete inventory brr related management initiatives. The cost of manufact overhead. The Company’s distribution inventories include the cost of materials purchased for resale and inbound freight. certain inventories, average costing ging and other considerations for realizable value, the Company n-hand and ased on current assessments of future demand, market conditions, and urt ed inventories includes raw materials, inbound freight, labor and ff Prepaid Expenses and Other ($ in thousands) Vendor rebates receivabla e Prepaid expenses Vendor and other deposits Prepaid income taxes Total Property, Plant and Equipment As of December 31 2023 2022 9,303 22,868 8,211 8,869 49,251 $ $ 12,366 22,311 11,649 — 46,326 $ $ Property, plant and equipment (“PP&E”) is generally recorded at cost. Depreciation is computed primarily by the straight-line method applied to individual items based on estimated useful lives, which is as follows for 2023: Asset Class Buildings and improvements Leasehold improvements Capia talized software Machinery arr nd equipment and transportation equipment F-11 Estimated life ( ff years) 10-30 10 3-5 3-7 Leasehold improvements are amortized over the lesser of their usefulff lives or the related lease term. The recoverabia lity of PP&E is evaluated whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverabla e, primarily based on estimated selling price, appraised value or projected future cash floff ws. Goodwill and Intangible Assets ite-lived intangible assets are not amortized but are subject to an annual impairment test based on their Goodwill and indefinff estimated faiff r value. The Company reviews goodwill and indefinite-lived intangible assets for impairment in the fourth quarter, or more freff quently, if events or changes in circumstances indicate the assets might be impaired. The impairment test was performed on October 1, 2023. a In conducting its impairment testing, the Company estimates the fair value of our reporting units using both an income and oach. The market approach includes a comparison of multiples of earnings before interest, taxes, market based appr the reporting units to similar businesses or guideline companies whose securities are depreciation and amortization forff oach calculates the present value of expected cash floff ws to determine the actively traded in public markets. The income appr estimated faiff oach requires us to estimate future cash floff ws, the timing of these cash floff ws, and a discount rate (based on a weighted average cost of capital), which represents the time value of money and the inherent risk and uncertainty of the futff urt e cash floff ws. The assumptions we use to estimate future cash floff ws are consistent with the assumptions that our reporting units use forff es. When calculating the present value of futff urt e cash floff ws under the income approach, we take into consideration multiple variables, including forecasted sales volumes and operating income, current industry arr r value of our reporting units. Additionally, the income appr nd economic conditions, and historical results. internal planning purpos a a r If we determine that the estimated faiff r value of each reporting unit exceeds its carrying amount, goodwill of the reporting unit th quarter 2023 goodwill impairment test concluded that the fair values of each of our reporting units is not impaired. Our four exceeded their carrying values. Our 2023 indefinite-lived intangibles test also concluded that the fair values of intangibles exceeded their respective carrying values. ff Impairment of Long-Lived Assets ff u several fact When events or conditions warrant, the Company evaluates the recoverabia lity of long-lived assets other than goodwill and indefinite-lived intangible assets and considers whether these assets are impaired. The Company assesses the recoverabia lity ors, including management's intention with respect to the assets and their projeo cted of these assets based upon future undiscounted cash flows. If projected undiscounted cash floff ws are less than the carrying amount of the assets, the Company adjusts the carrying amounts of such assets to their estimated faiff r value. A significant adverse change in the Company’s business climate in future periods could result in a significant loss of market share or the inabia lity to achieve previously projected revenue growth and could lead to a required assessment of the recoverabia lity of the Company’s long- lived assets, which may subsequently result in an impairment charge. Finite-lived intangible assets are amortized over their usefulff ther in Note 6 "Goodwill and Intangible Assets", and are also subju ect to an impairment test based on estimated undiscounted cash floff ws when impairment indicators exist. lives, as detailed furff Fair Value and Financial Instruments The Company accounts forff r values are separated into three broad levels (Levels 1, 2 and 3) based on the assessment of the availabia lity of observabla e market data and the significance of non- observabla e data used to determine fair value. Each fair value measurement must be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety. The three levels are as folff certain assets and liabia lities at fair value. The faiff lows: • • • Level 1 inputs, which are quoted prices (unadjusted) in active markets for identical assets or liabia lities that the reporting entity has the abia lity to access at the measurement date. Level 2 inputs, which are inputs other than quoted prices included within Level 1 that are observabla e forff liability, either directly or indirectly. If the asset or liabia lity has a specified (contractuat be observabla e forff the asset or liabia lity. These unobservabla e inputs refleff ct the entity’s Level 3 inputs, which are unobservabla e inputs forff own assumptions about the assumptions that market participants would use in pricing the asset or liabia lity, and are developed based on the best inforff mation availabla e in the circumstances (which might include the reporting entity’s own data). the asset or l) term, a Level 2 input must subsu tantially the full term of the asset or liabia lity. F-12 ($ in millions) Cash equivalents(1) 7.50% senior notes due 2027(2) 4.75% senior notes due 2029(2) 1.00% convertible notes due 2023(2) 1.75% convertible notes due 2028(2) Term loan due 2027(3) 2027(3) Revolver dued Contingent consideration(4) As of December 31 2023 2022 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 $ $ $ $ $ $ $ $ 6.1 $ — $ — $ — $ — $ — $ — $ — $ — $ 303.7 $ 320.2 $ — $ 295.2 $ 129.4 $ — $ — $ — $ — $ — $ — $ — $ — $ — $ 8.5 $ 15.2 $ — $ — $ — $ — $ — $ — $ — $ — $ 293.9 $ 293.8 $ 172.0 $ 219.9 $ 136.9 $ 80.3 $ — $ — — — — — — — 9.2 (1) The carrying amounts of cash equivalents, representing government and other money market funds maturities, are reported on the consolidated balance sheet as of December 31, 2023 as a component of "Cash and cash equivalents". ff traded in an active market with relatively short (2) The amounts of these notes listed above sheets as of December 31, 2023 and 2022 using the interest rate method. are the fair values for disclosure purpos a rr es only, and they are recorded in the Company's consolidated balance (3) The carrying amounts of our term loan and revolving credit facility approximate fair value as of December 31, 2023 and 2022 based upon conditions in comparison to the terms and conditions of debt instruments with similar terms and conditions availabla e at those dates. u their terms and (4) The estimated faiff r value of the Company's contingent consideration is discussed furff ther in Note 3 "Acquisitions". Income Taxes ax rates of the federal, state, and international jurisdictions in which the Income tax expense is calculated based on statutt ory t Company operates and income earned or appor tioned to each of these respective jurisdictions, as well as any additional tax planning availabla e to the Company in these jurisdictions. Certain income and expenses are not reported in tax returns and financial statements in the same year. The tax effect of such temporary drr rences is reported as deferff red income taxes. iffeff a rr Deferred taxes are provided on an asset and liabia lity method whereby deferff red taxes are recognized based on temporaryrr differff ences between the reported amounts of assets and liabia lities and their tax basis. Deferred tax assets are reducd ed by a valuation allowance when it is more likely than not that some portion or all of the deferff red tax assets may not be realized. The Company reports a liabia lity, if any, for unrecognized tax benefits resulting froff m uncertain tax positions taken or expected to be taken in a tax returt n. The Company recognizes interest and penalties, if any, related to unrecognized tax benefitsff in income tax expense. Recently Issued Accounting Pronouncements g y Accounting Pronouncements Not Yet Adopted In October 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-06, "Disclosure Improvements." The amendments in this update modify the disclosure or presentation requirements of a variety of topics in the codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. The amendments in this ASU are effeff ctive forff r June 30, 2027. The Company is currently evaluating the impacts of the provisions of ASU 2023-06. public business entities for interim periods beginning afteff rovements to Repor tes In November 2023, the FASB issued ASU 2023-07, "ImpII reportabla e segment disclosure requirements by requiring disclosures of significant reportabla e segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profitff or loss. This ASU also requires disclosure of the title and position of the individual identifieff d as the CODM or loss in assessing segment and an explanation of how the CODM uses the reported measures of a segment’s profitff r December 15, performance and deciding how to allocate resources. The ASU is effective forff 2023, and interim periods within fiscal years beginning afteff ied a retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This ASU will r December 15, 2024. Adoption of the ASU should be appl annual periods beginning afteff losures". This ASU upda table SegSS megg nt Discii u e F-13 likely result in additional required disclosures when adopted. The Company is currently evaluating this guidance to determine the impact on its disclosures; however, adoption will not impact our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, "ImpII isclosures". This ASU establa ishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of inforff mation in the rate reconciliation. r fiscal years beginning afteff They must also further disaggregate income taxes paid. The new standard is effeff ctive forff December 15, 2024, with retrospective appl ication permitted. The Company is currently evaluating this guidance to determine the impact on its disclosures; however, adoption will not impact our consolidated financial statements. rovements to Income Tax Daa a 2. REVENUE RECOGNITION In the folff lowing tabla e, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportabla e segment, consistent with how the Company believes the naturt e, amount, timing, and uncertainty of revenue and cash floff ws are affected by economic factors: ($ in thousands) Market type: Recreational Vehicle Marine ff Manufact Industrial Total urt ed Housing ($ in thousands) Market type: Recreational Vehicle Marine Manufact ff Industrial Total g urt ed Housin ($ in thousands) Market type: Recreational Vehicle Marine Manufact ff Industrial Total g urt ed Housin 3. ACQUISITIONS Q General Year Ended December 31, 2023 Manufacff turing Distribution Total $ $ 1,018,003 868,681 258,551 441,548 2,586,783 $ $ 485,339 55,080 309,659 31,184 881,262 $ $ 1,503,342 923,761 568,210 472,732 3,468,045 Year Ended December 31, 2022 Manufacff turing Distribution Total $ $ 1,777,541 976,699 3 44,983 504,543 3,603,766 $ $ 815,478 60,803 359,618 42,207 1,278,106 $ $ 2,593,019 1,037,502 704,601 546,750 4,881,872 Year Ended December 31, 2021 Manufacff turing Distribution Total $ $ 1,617,852 633,848 2 61,856 416,910 2,930,466 $ $ 786,590 31,417 283,207 46,412 1,147,626 $ $ 2,404,442 665,265 545,063 463,322 4,078,092 Business combinations generally take place to strengthen Patrick's positions in existing markets and increase its market share and per unit content, expand into additional markets, or gain key technology. Acquisitions are accounted for under the acquisition method of accounting. For each acquisition, the excess of the purchase consideration over the fair value of the net F-14 assets acquired is recorded as goodwill, which generally represents the combined value of the Company’s existing purchasing, manufacff turing, sales, and systems resources with the organizational talent and expertise of the acquired companies’ respective management teams to maximize effiff ciencies, market share growth and net income. ecember 31, 2023, 2022 and 2021. The The Company completed the acquisitions discussed below dduriingg thhe yyears e dnded Dd acquisitions were funded through cash on hand, issuance of shares, or borrowings under the Company’s credit facff ility in existence at the time of acquisition. For each of the acquisitions discussed, we either acquired the assets and assumed the liabilities of the business, or acquired 100% of the equity interests. Assets acquired and liabia lities assumed in the individual r values as of the respective acquisitions were recorded on the Company’s consolidated balance sheet at their estimated faiff dates of acquisition. For each acquisition, the Company completes its allocation of the purchase price to the faiff r value of acquired assets and liabia lities within a one-year measurement period. For those acquisitions where the purchase price allocation is provisional, which includes certain acquisitions completed in 2023, the Company is still in the process of finalizing the fair values of acquired intangible assets and fixff ed assets. For the years ended December 31, 2023, 2022 and 2021, revenue of approximately $17.7 million, $121.8 million and $259.9 million, respectively, was included in the Company’s consolidated statements of income pertaining to the businesses acquired in each such respective year. For the years ended December 31, 2023, 2022 and 2021, operating income of approximately $1.0 million, $19.4 million and $25.0 million, respectively, was included in the Company’s consolidated statements of income pertaining to the businesses acquired in each such respective year. Acquisition-related costs associated with the businesses acquired in 2023, 2022 and 2021 were immaterial in each respective year. Contingent Considerdd ation In connection with certain acquisitions, if certain financial results for the acquired businesses are achieved, the Company is required to pay additional cash consideration. The Company records a liabia lity for the fair value of the contingent consideration related to each of these acquisitions as part of the initial purchase price based on the present value of the expected future cash floff ws and the probabia lity of future payments at the date of acquisition. lowing tabla e provides a reconciliation of the beginning and ending aggregate faiff r values of the contingent The folff consideration: ($ in thousands) Beginning fair value - contingent consideration Additions Fair value adjustments Settlements g g Ending fair value - contingent consideration g g Year Ended December 31 2023 2022 $ $ 9,213 3,590 917 (5,210) 8,510 $ $ 12,275 1,940 2,228 (7,230) 9,213 The folff lowing tabla e shows the balance sheet location of the faiff of contingent consideration payments the Company may be subju ect to: r value of contingent consideration and the maximum amount ($ in thousands) Accruer d liabia lities Other long-term liabilities Total faiff gg r value of contingent consideration Maximum amount of contingent consideration As of December 31 2023 2022 $ $ $ 7,500 1,010 8,510 8,510 $ $ $ 5,250 3,963 9,213 10,747 F-15 2023 Acquisitions The Company completed three acquisitions in the year ended December 31, 2023, including the folff announced acquisition (collectively, the "2023 Acquisitions"): lowing previously Company Segment BTI Transport Distribution Description Provider of transportation and logistics services to marine original equipment manufact urt ers ("OEMs") and dealers, based in Elkhart, Indiana, acquired in April 2023. The acquired business operates under the Patrick Marine Transport brand. ff oximately Inclusive of two acquisitions not discussed above $26.3 million, plus contingent consideration over a two-year period based on futff urt e performance in connection with certain acquisitions. The preliminary prr urchase price allocations are subject to valuation activities being finalized, and thus certain purchase accounting adjustments are subject to change within the measurement period as the Company finff alizes its estimates. Changes to preliminary prr urchase accounting estimates recorded in 2023 related to the 2023 Acquisitions were immaterial. the 2023 Acquisitions was appr , total cash consideration forff a a 2022 Acquisitions The Company completed fivff e acquisitions in the year ended December 31, 2022, including the folff announced acquisitions (collectively, the "2022 Acquisitions"): lowing three previously Company Segment Rockford Corporation Manufacff turing Description urt er of audio systems and components through Designer and manufact its brand Rockford Fosgate®, primarily serving the powersports and automotive afteff rmarkets, based in Tempe, Arizona, acquired in March 2022. ff Diamondback Towers, LLC Manufacff turing Transhield Manufacff turing turer of wakeboard/sdd ki towers and accessories for marine Manufacff OEMs, based in Cocoa, Florida, acquired in May 2022. urt er of customized and proprietary protection Designer and manufact solutions for the marine, military a nd industrial markets, including covers and shrinkabla e packaging, to protect equipment durd ing transport and storage, based in Elkhart, Indiana, acquired in November 2022. ff rr Inclusive of two acquisitions not discussed above oximately $248.1 million, plus contingent consideration over a one to two-year period based on futff urt e performance in connection with certain acquisitions. Purchase price allocations and all valuation activities in connection with the 2022 Acquisitions have urchase accounting estimates recorded in 2023 related to the 2022 Acquisitions were been finalized. Changes to preliminary prr immaterial and relate primarily to the valuation of intangible and fixed assets. the 2022 Acquisitions was appr , total cash consideration forff a a F-16 2021 Acquisitions The Company completed thirteen acquisitions in the year ended December 31, 2021, including the folff previously announced acquisitions (collectively, the "2021 Acquisitions"): lowing seven Company Segment rr Sea-Dog Corpor Lect Plastics (collectively, "Sea-Dog") ation & Sea- Distribution & ing ff Manufact urt Hyperform, Inc. Manufacff turing Alpha Systems, LLC Manufact ing ff & Distribution urt Coyote Manufact Company ff urt ing Manufacff turing Tumacs Covers Manufacff turing Wet Sounds, Inc. & Katalyst Industries LLC (collectively "Wet Sounds") Manufacff turing Williamsburg Marine LLC & Williamsburg Furniture, Inc. (collectively "Williamsburg") Manufacff turing ff rr ff brand Description Distributor of a variety of marine and powersports hardware and accessories to distributors, wholesalers, retailers, and manufact urt ers and provider of plastic injen ction molding, design, product development and expert tooling to companies and government entities, based in Everett, Washington, acquired in March 2021. turer of high-quality, non-slip foam flooring, operating under Manufacff the SeaDek® brand name, forff the marine OEM market and aftermarket as well as serving the pool and spa, powersports and utility markets the SwimDek under names, with and EndeavorDek manufacff turing facilities in Rockledge, Florida and Cocoa, Florida, acquired in April 2021. turer and distributor of component producd ts and accessories for Manufacff urt ed housing and industrial end markets that the RV,RR marine, manufact includes adhesives, sealants, rubbe r roofing, roto/blow molding and injen ction molding products, floff oring, insulation, shutters, skylights, and various other products and accessories, operating out of nine facilities in Elkhart, Indiana, acquired in May 2021. urt er of a variety of steel and Designer, fabra icator, and manufact aluminum products, leaning towers, T-tops, including boat posts, and other custom components primarily for the marine OEM market, based in Nashville, Georgia, acquired in August 2021. turer of custom designed boat covers, canvas fraff mes, and Manufacff tops, primarily serving large marine OEMs and dealers, bimini headquartered in Pittsburgh, Pennsylvania, with manufacff turing facilities in Indiana and Pennsylvania, and a distribution/service center in Michigan, acquired in August 2021. Designer, engineer, and fabra icator of innovative audio systems and accessories, tower speakers, soundbars, and subwu ooferff s sold directly to OEMs and consumers, and to dealers and retailers, primarily within the marine market as well as to the home audio and powersports markets and afteff rmarkets, based in Rosenburg, Texas, acquired in November 2021. Manufacff turer of seating for the RV and marine end markets sold primarily to OEMs, based in Milford and Nappanee, Indiana, acquired in November 2021. including amplifieff trailers, rs, ff Inclusive of six acquisitions not discussed above oximately $509.1 million, plus contingent consideration over a one to three-year period based on futff urt e performance in connection with certain acquisitions. Purchase price allocations and all valuation activities in connection with the 2021 Acquisitions have been finalized. the 2021 Acquisitions was appr , total cash consideration forff a a F-17 1 2 0 2 ) 2 ( s n o i t i s i u q c A s n o i t i s i u q c A 2 2 0 2 l a t o T s r e h t O l l A B n o i t i s i u q c A A n o i t i s i u q c A 3 2 0 2 s n o i i t t i i s i i u u q q c A A 4 6 0 , 9 0 5 $ 6 8 0 , 8 4 2 $ 4 2 8 , 0 2 $ 5 0 7 , 4 9 $ 7 5 5 , 2 3 1 $ 6 1 3 , 6 2 — 0 3 7 ,, , 4 1 1 2 , 0 1 5 0 0 , , , 4 2 5 8 1 1 , 6 2 5 0 3 , 7 6 7 4 7 , 3 1 4 9 8 , 4 5 0 3 5 , 5 2 3 4 6 , 3 0 5 8 , 8 2 9 1 5 , 6 5 2 7 0 , 4 6 1 ) 8 1 5 , 5 ( ) 9 0 3 , 2 3 ( ) 2 1 0 , 0 2 ( ) 6 8 4 , 1 ( 3 5 3 , 1 8 3 2 5 6 , 2 4 1 — $ $ $ $ — — 0 4 8 ,, , 1 6 2 9 , , , 9 4 2 5 2 4 , 6 2 8 2 8 , 3 4 6 1 6 , 1 1 3 2 , 4 1 1 5 9 , 4 5 2 0 , 6 9 0 1 8 0 0 0 , 7 1 0 9 3 , 6 2 ) 4 7 0 , 1 ( ) 6 3 1 , 9 2 ( ) 7 7 8 , 3 ( $ $ $ $ — — 0 4 8 ,, , 1 4 6 6 , , , 2 2 5 0 9 7 2 1 2 5 3 , 2 4 6 4 , 1 9 9 5 5 5 0 , 7 — 0 1 3 0 1 3 , 1 ) 3 7 2 ( ) 6 2 3 ( ) 9 7 2 , 1 ( $ $ $ $ — — — 5 0 7 , , , 4 9 0 8 8 , 4 2 3 7 , 8 4 6 1 6 8 0 , 8 5 3 4 , 1 — 0 0 5 , 9 0 8 0 , 8 0 7 9 , 0 3 ) 9 8 2 ( ) 6 3 3 , 3 ( ) 6 4 1 , 1 ( $ $ $ $ — — — 7 5 5 , , , 2 3 1 0 4 6 , 0 2 4 4 7 , 2 3 5 2 3 , 1 1 8 6 , 4 7 1 9 , 2 0 0 0 , 8 5 0 0 5 0 0 5 , 7 0 0 0 , 7 1 ) 2 1 5 ( ) 5 0 4 , 2 ( ) 1 2 5 , 4 2 ( $ $ $ $ ) 6 2 ( — 0 0 5 ,, , 3 0 9 7 ,, , 9 2 8 1 6 0 3 4 , 4 5 0 1 4 4 0 , 1 4 9 2 , 0 1 0 7 2 , 0 1 — — 0 3 4 ) 2 6 2 ( ) 8 1 5 ( ) 1 8 7 ( $ ) 4 1 6 , 2 3 ( $ — $ ) 4 8 6 , 2 1 ( $ ) 0 3 9 , 9 1 ( $ — — 1 5 3 , 5 8 5 7 5 , 4 6 1 — 4 4 2 , 2 1 0 2 4 , 0 1 — 2 9 3 , 4 5 3 1 3 , 0 4 — 9 3 9 , 7 9 8 1 6 , 4 3 5 0 9 , 5 0 3 6 , 5 2 ) ) ) 5 4 7 , , , 1 ( ( ( $ $ $ ) 1 ( t e n , r e h t o d n a k c a b d l o h l a t i p a a c g n i k r o W d e r i u q c a h s a c f o t e n , h s a C ) s d n a s u o h t n i $ ( n o i t a r e d i s n o C s t e s s a e s u - 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0 9 a n i d e l t t e s y l l a c i p y t e r a h c i h w s k c a b d l o h l a t i p a c g n i k r o w n i a t n o c s n o i t i s i u q c a n i a t r e C ) 1 ( . 3 2 0 2 , 1 3 r e b m e c e D f o e b n a c s n o i t i s i u q c A 1 2 0 2 e h t f o l i a t e d r e h t r u F . e t a d n o i t i s i u q c a e h t f o s a 0 6 . 9 8 $ f o e c i r p g n i s o l c a t a k c o t s n o m m o c f o s e r a h s 1 6 9 , 3 1 1 d e u s s i y n a p m o C e h t , s n o i t i s i u q c A 1 2 0 2 e h t f o e n o h t i w n o i t c e n n o c n I ) 2 ( . s n o i t i s i u q c a n i a t r e c o t g n i t a l e r s t l u s e r e r u t u f n o d e s a b n o i t a r e d i s n o c t n e g n i t n o c f o e u l a v r i a f ff e t a d n o i t i s i u q c a e h t t c e l f ff e r s t n u o m a e s e h T ) 3 ( . 3 2 0 2 , 4 2 y r a u rr r b e F n o C E S e h t h t i w d e l i ff f K - 0 1 m r o F 2 2 0 2 e h t n i d n u o f s c a m u T t p e c x e , s n o i t i s i u q c A 1 2 0 2 e h t r o f d n a , ) n o i l l i m 9 . 4 7 $ y l e t a m i x o r p p a a g n i l a t o t ( B n o i t i s i u q c A d n a A n o i t i s i u q c A t p e c x e , s n o i t i s i u q c A 2 2 0 2 e h t r o ff f , s n o i t i s i u q c A 3 2 0 2 e h t r o f e l b i t c u d e d - x a t s i l l i w d o o G ) 4 ( . ) n o i l l i m 2 . 6 $ y l e t a m i x o r p p a a ( s r e v o C n o i t a n i b m o c s s e n i s u b a n i d e r i u q c a s t e s s a t e n e h t n e h w d e z i n g o c e r s i n i a g e s a h c r u p n i a g r a b A . n i a g e s a h c r u p n i a g r a b n o i l l i m 7 . 1 $ a d e z i n g o c e r y n a p m o C e h t , s n o i t i s i u q c A 3 2 0 2 e h t f o e n o h t i w n o i t c e n n o c n I ) 5 ( " e v i t a r t s i n i m d a d n a l a r e n e g , g n i l l e S " n i d e d u l c n i s i d n a n o i t i s i u q c a t a h t n i s p i h s n o i t a l e r r e m o t s u c o t d e n g i s s a e u l a v r i a f ff e h t o t e l b a t u b i r t t a y l i r a m i r p s i n i a g s i h T . d i a p n o i t a r e d i s n o c e h t n a h t e u l a v r i a f ff r e h g i h a e v a h . 3 2 0 2 , 1 3 r e b m e c e D d e d n e r a e y e h t r o f ff e m o c n i f o t n e m e t a t s d e t a d i l o s n o c e h t n i : s n o i t i s i u q c A 1 2 0 2 d n a , 2 2 0 2 , 3 2 0 2 r o ff f n o i t i s i u q c a e h t f o e t a d e h t f o s a d e m u s s a s e i t i l i b a a i l d n a d e r i u q c a s t e s s a e h t f o s e u l a v r i a f ff e h t s e z i r a m m u s e l b a a t g n i w o l l o f ff e h T 8 1 - F We estimate the value of acquired property, plant, and equipment using a combination of the income, cost, and market approaches, such as estimates of future income growth, capitalization rates, discount rates, and capital expenditure needs of the acquired businesses. We estimate the value of customer relationships using the multi-period excess earnings method, which is a variation of the income approach, calculating the present value of incremental after-tax cash floff ws attributable to the asset. Non-compete agreements are valued using a discounted cash floff w appr oach, which is a variation of the income approach, with and without rties to the non-compete agreements. Trademarks and patents are valued using the relief-from-royalty the individual counterpar method, which appl ies an estimated royalty rate to forecasted future cash floff ws, discounted to present value. a a The estimated useful life f years. The weighted average estimated useful life f indefinite usefulff life. orff ff ff customer relationships is 10 years. The estimated usefulff non-compete agreements is 5 ff life f patents is 13 years, ranging from 10 to 18 years. Trademarks have an orff orff Pro ForFF marr Infon rmatiott n (Un(( auditeii d) lowing pro forff ma information assumes the 2023 Acquisitions and 2022 Acquisitions occurred as of the beginning of The folff the year immediately preceding each such acquisition. The pro forma inforff mation contains the actuat l operating results of each of the 2023 Acquisitions and 2022 Acquisitions, combined with the results prior to their respective acquisition dates, adjusted to reflect the pro forma impact of the acquisitions occurring as of the beginning of the year immediately preceding each such acquisition. The pro forma inforff mation includes finff ancing and interest expense charges based on the actuat l incremental borrowings incurred in connection with each transaction as if it occurred as of the beginning of the year immediately preceding each such acquisition. In addition, the pro forma inforff mation includes incremental amortization expense related to intangible assets acquired of $0.4 million and $5.6 million forff the years ended December 31, 2023 and 2022, respectively, in connection with the acquisitions as if they occurred as of the beginning of the year immediately preceding each such acquisition. ($ in thousands except per share data) Net sales Net income Basic earnings per common share Diluted earnings per common share Year Ended December 31 2023 $ $ 3,483,940 143,693 $ $ 6.68 6.53 2022 4,994,679 333,835 15.07 13.72 The pro forma inforff mation is presented for inforff mational purpos operations that actuat to be a projeo ction of futff urt e results. es only and is not necessarily indicative of the results of lly would have been achieved had the acquisitions been consummated as of that time, nor is it intended r 4. INVENTORIES ($ in thousands) Raw materials Work in process Finished goods Less: reserve forff inventory err xcess and obsolescence Total manufact ff urt ed goods, net Materials purchased for resale (distribution products) Less: reserve forff inventory err xcess and obsolescence Total materials purchased for resale (distribution products), net As of December 31 2023 2022 $ 269,786 $ 16,596 107,675 (15,990) 378,067 140,147 (8,081) 132,066 348,670 22,630 141,516 (14,059) 498,757 175,061 (5,977) 169,084 667,841 Total inventories $ 510,133 $ F-19 5. PROPERTY, PLANT AND EQUIPMENT Q , ($ in thousands) Land and improvements Building and improvements Machinery arr nd equipment Transportation equipment Leasehold improvements Property, plant and equipment, at cost Less: accumulated depreciation and amortization Property, plant and equipment, net yy As of December 31 2023 2022 $ 19,502 $ 85,941 485,020 21,900 33,736 646,099 (292,474) 19,242 82,280 442,881 11,866 29,252 585,521 (234,949) $ 353,625 $ 350,572 Total depreciation expense forff $57.5 million and $48.5 million, respectively. property, plant and equipment forff fiscal 2023, 2022, and 2021 was $65.8 million, Accruer d capital expenditures were appr 31, 2023, 2022, and 2021. a oximately $2.1 million, $1.7 million and $2.6 million forff the years ended December 6. GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022 by segment are as follows: ($ in thousands) Balance - January 1, 2022 Acquisitions Adjud stment to prior year preliminary purchase price allocation Balance - December 31, 2022 Acquisitions Adjud stment to prior year preliminary purchase price allocation Balance - December 31, 2023 Manufacff turing Distribution Total $ $ $ 481,906 $ 69,471 $ 551,377 82,886 (6,430) 240 1,190 83,126 (5,240) 558,362 $ 70,901 $ 629,263 — 2,008 5,905 217 5,905 2,225 560,370 $ 77,023 $ 637,393 As of December 31, 2023 and 2022, accumulated impairment of goodwill in the Manufact ff urt ing segment was $27.4 million. Intangible assets, net consist of the following: ($ in thousands) Customer relationships Non-compete agreements Patents Trademarks Gross intangible assets Less: accumulated amortization Intangible assets, net gg As of December 31 2023 2022 $ 729,664 $ 722,503 21,561 69,401 197,027 1,017,653 (366,500) 20,412 69,164 195,957 1,008,036 (287,806) $ 651,153 $ 720,230 F-20 Changes in the carrying value of intangible assets for the years ended December 31, 2023 and 2022 by segment are as follows: Manufact ff urt ing Distribution Total ($ in thousands) Balance - January 1, 2022 Acquisitions Amortization Adjud stment to prior year preliminary purchase price allocation Balance - December 31, 2022 Acquisitions Amortization Adjud stment to prior year preliminary purchase price allocation $ 534,827 $ 105,629 $ 145,204 (62,786) 5,402 622,647 3,061 (67,645) (4,360) 260 (10,443) 2,137 97,583 11,000 (11,049) (84) Balance - December 31, 2023 $ 553,703 $ 97,450 $ 640,456 145,464 (73,229) 7,539 720,230 14,061 (78,694) (4,444) 651,153 Amortization expense forff December 31, 2023 is estimated to be as folff lows (in thousands): the next fivff e fisff cal years ending December 31 related to finite-lived intangible assets as of 2024 2025 2026 2027 2028 7. DEBT The folff lowing tabla e presents a summary of total debt outstanding: ($ in thousands) Long-term debt: 1.00% convertible notes due 2023 Term loan due 2027 Revolver dued 2027 7.50% senior notes due 2027 1.75% convertible notes due 2028 4.75% senior notes due 2029 Total long-term debt Less: convertible notes debt discount, net Less: term loan deferred finff ancing costs, net Less: senior notes deferred finff ancing costs, net Less: current maturities of long-term debt $ $ $ $ $ 77,403 73,316 67,455 61,001 47,877 As of December 31 2023 2022 $ — $ 129,375 — 300,000 258,750 350,000 172,500 136,875 80,289 300,000 258,750 350,000 1,038,125 1,298,414 (4,917) (548) (6,804) (7,500) (5,989) (701) (8,075) (7,500) Total long-term debt, less current maturities, net gg $ 1,018,356 $ 1,276,149 2021 Credit Facility On August 11, 2022, the Company entered into the first amendment of its Fourth Amended and Restated Credit Agreement dated April 20, 2021 (as amended, the “2021 Credit Agreement”), under which the senior secured credit facff ility was increased to $925 million from $700 million and the maturt ity date was extended to August 11, 2027 from April 20, 2026. ility under the 2021 Credit Agreement is comprised of a $775 million revolving credit facility (the The senior credit facff F-21 2027") and the remaining balance of the $150 million term loan (the "Term Loan due 2027" and together with "Revolver dued the Revolver dued red finff ancing 2027, the "2021 Credit Facility"). The Company recorded a $0.3 million write-off off costs as a result of the amendment, which is included in "Selling, general and administrative" in the Company's consolidated statements of income for the year ended December 31, 2022. Pursuant to the amendment, interest rates forff borrowings under the 2021 Credit Agreement transitioned to a Secured Overnight Financing Rate ("SOFR") based option froff m a London Inter- Bank Offeff red Rate ("LIBOR") based option. f deferff The Company determined that the amended terms of the 2021 Credit Agreement were not subsu tantially different from the terms of the Company’s 2021 Credit Agreement prior to the amendment. Accordingly, debt modification accounting treatment was appa lied and the related impacts were immaterial. Borrowings under the 2021 Credit Facility are secured by subsu tantially all personal property assets of the Company and any domestic subsu idiary guarantors. Pursuant to the 2021 Credit Agreement: • • • The quarterly repayment scheduld e forff 2027 was revised, with quarterly installments in the following amounts: (i) beginning June 30, 2021, through and including June 30, 2025, in the amount of $1,875,000, and (ii) beginning September 30, 2025, and each quarter thereafteff r, in the amount of $3,750,000, with the remaining balance dued the Term Loan dued at maturity; borrowings under the Revolver dued 2027 and the Term Loan due 2027 are the Prime Rate or The interest rates forff SOFR plus a margin, which ranges froff m 0.00% to 0.75% for Prime Rate loans and from 1.00% to 1.75% for SOFR loans depending on the Company's consolidated total leverage ratio, as definff ed below. The Company is required to ff pay fees on unused but committed portions of the Revolver dued 2027, which range from 0.15% to 0.225%; and Covenants include requirements as to a maximum consolidated secured net leverage ratio (2.75:1.00, increasing to 3.25:1.00 in certain circumstances in connection with Company acquisitions) and a minimum consolidated fixff ed charge coverage ratio (1.50:1.00) that are tested on a quarterly basis, and other customary crr ovenants. The total face value of the Term Loan due 2027 is $150.0 million. Total availabla e borrowing capacity under the Revolver dued 2027 is $775.0 million. As of December 31, 2023, the Company had $129.4 million outstanding under the Term Loan due 2027. The interest rate forff 2027 under the SOFR-based option, and no outstanding borrowings for the Revolver dued incremental borrowings as of December 31, 2023 was SOFR plus 1.75% (or 7.20%) forff the SOFR-based option. The feeff payabla e on committed but unused portions of the Revolver dued 2027 was 0.225% as of December 31, 2023. 1.75% Convertible Senior Notes due 2028 In December 2021, the Company issued $258.75 million aggregate principal amount of 1.75% Convertible Senior Notes dued 2028 (the “1.75% Convertible Notes”). The total debt discount of $56.1 million at issuance consisted of two components: (i) the conversion option component, recorded to shareholders' equity, in the amount of $48.8 million, representing the difference between the principal amount of the 1.75% Convertible Notes upon issuance less the present value of the future cash floff ws of the 1.75% Convertible Notes using a borrowing rate for a similar non-convertible debt instrument and (ii) debt issuance costs of $7.3 million. The conversion option component of the 1.75% Convertible Notes was valued using Level 2 inputs under the fair value hierarchy. The unamortized portion of the total debt discount is being amortized to interest expense over the life off f the 1.75% Convertible Notes. The effective interest rate on the 1.75% Convertible Notes, which includes the non-cash interest expense of debt discount amortization and debt issuance costs, was 2.14% as of December 31, 2023. u a oximately $249.7 million, afteff r deducd ting the The net proceeds froff m the issuance of the 1.75% Convertible Notes were appr ing expenses payable by the Company, but before deducting the net initial purchasers’ discounts and commissions and offerff cost of the 1.75% Convertible Note Hedge Transactions and the 1.75% Convertible Note Warrant Transactions (each as defined herein) described in Note 8 "Derivative Financial Instruments". The 1.75% Convertible Notes are senior unsecured obligations of the Company and pay interest semi-annually in arrears on June 1 and December 1 of each year at an annual rate of 1.75%. The 1.75% Convertible Notes will mature on December 1, 2028 unless earlier repurchased or converted in accordance with their terms. Prior to June 1, 2028, the 1.75% Convertible Notes may be converted at the option of the holders only upon the occurrence of specified events and durd ing certain periods, and thereafteff r until the close of business on the second scheduled trading day immediately preceding the maturity date. The Company will satisfy any conversion by paying o the aggregate principal amount of the 1.75% Convertible Notes to be converted and by paying or delivering, as the cash up tu F-22 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 the 1.75% Convertible Notes is amount of the 1.75% Convertible Notes being converted. The initial conversion rate forff 9.9887 shares of the Company's common stock per $1,000 principal amount of the 1.75% Convertible Notes (or 2,584,578 shares in the aggregate) and is equal to an initial conversion price of approximately $100.11 per share. If an event of default on the 1.75% Convertible Notes occurs, the principal amount of the 1.75% Convertible Notes, plus accrued and unpaid interest (including additional interest, if any) may be declared immediately due and payable, subject to certain conditions. The 1.75% Convertible Notes are guaranteed by each of the Company’s subsidiaries that guarantee the obligations of the Company under the 2021 Credit Facility. 1.75% Convertible Notes holders may convert their Convertible Notes on or after June 28, 2028 at any time at their option. Holders may convert 1.75% Convertible Notes prior to June 28, 2028, only under the folff lowing circumstances: (i) durd ing any calendar quarter, if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each r any five consecutive trading day period in which the applicable trading day, (ii) durd ing the five business day period afteff trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day and (iii) upon the occurrence of certain specifieff d distributions or corporate events. 4.75% Senior Notes due 2029 In April 2021, the Company issued $350.0 million aggregate principal amount of 4.75% Senior Notes dued 2029 (the "4.75% Senior Notes"). The 4.75% Senior Notes will mature on May 1, 2029. Interest on the 4.75% Senior Notes started accruing April 20, 2021 and is payable semi-annually in cash in arrears May 1 and November 1 of each year, beginning on November 1, 2021. The effective interest rate on the 4.75% Senior Notes, which includes debt issuance costs, is approximately 4.97%. In connection with the issuance of the 4.75% Senior Notes, the Company incurred and capitalized as a reduction of the principal amount of the 4.75% Senior Notes appr oximately $5.1 million in deferred finff ancing costs which are being amortized using the effeff ctive interest rate over the term of the 4.75% Senior Notes. a The 4.75% Senior Notes are senior unsecured indebtedness of the Company and are guaranteed by each of the Company’s subsu idiaries that guarantee the obligations of the Company under the 2021 Credit Facility. If the Company experiences specific kinds of changes of control, the Company must offeff r to repurchase all of the 4.75% Senior Notes (unless otherwise redeemed) at a price equal to 101% of the aggregate principal amount thereof, plus accruerr d and unpaid interest. The Company may redeem the 4.75% Senior Notes, in whole or in part, at any time (a) prior to May 1, 2024, at a price equal to icable premium described in the associated indenturt e and accruerr d and 100% of the principal amount thereof, plus the appl unpaid interest and (b) on or afteff th in the indenturt e, plus accruerr d and o an aggregate unpaid interest. In addition, prior to May 1, 2024, the Company may redeem, in one or more transactions, up tu of 40% of the original principal amount of the 4.75% Senior Notes at a redemption price equal to 104.75% of the principal amount thereof, plus accruer d and unpaid interest, with the net cash proceeds of one or more equity offeff r May 1, 2024 at specified redemption prices set forff rings. a 7.50% Senior Notes due 2027 In September 2019, the Company issued $300 million aggregate principal amount of 7.50% Senior Notes dued 2027 (the “7.50% Senior Notes”). The 7.50% Senior Notes will mature on October 15, 2027. Interest on the 7.50% Senior Notes is payabla e semi-annually in cash in arrears on April 15 and October 15 of each year. The effeff ctive interest rate on the 7.50% Senior Notes, which includes debt issuance costs, is 7.82%. In connection with the issuance of the 7.50% Senior Notes, the Company incurred and capitalized as a reducd tion of the principal amount of the 7.50% Senior Notes appa roximately $5.8 million in deferff red finff ancing costs which is amortized using the effeff ctive interest rate over the term of the 7.50% Senior Notes. The 7.50% Senior Notes are senior unsecured indebtedness of the Company and are guaranteed by each of the Company’s subsu idiaries that guarantee the obligations of the Company under the 2021 Credit Facility. The Company may redeem the 7.50% Senior Notes, in whole or in part, at any time (a) prior to October 15, 2022, at a price equal to 100% of the principal amount thereof, plus the appl icable premium described in the associated indenturt e and accruer d and unpaid interest and (b) on r October 15, 2022 at specified redemption prices set forth in the indenturt e, plus accruer d and unpaid interest. In or afteff addition, prior to October 15, 2022, the Company may redeem, in one or more transactions, up tu o an aggregate of 40% of the original principal amount of the 7.50% Senior Notes at a redemption price equal to 107.5% of the principal amount thereof, a F-23 plus accruerr d and unpaid interest, with the net cash proceeds of one or more equity offeff specific kinds of changes of control, the Company must offeff redeemed) at a price equal to 101% of the aggregate principal amount thereof, plus accruer d and unpaid interest. rings. If the Company experiences r to repurchase all of the 7.50% Senior Notes (unless otherwise 1.00% Convertible Senior Notes due 2023 In January 2018, the Company issued $172.5 million aggregate principal amount of 1.00% Convertible Senior Notes dued ry 1, 2023, the Company utilized borrowing capacity under the Revolver 2023 (the “1.00% Convertible Notes”). On Februar due 2027 to satisfy its repayment obligation at maturt ity of the 1.00% Convertible Notes. All noteholders elected to receive cash in repayment of the 1.00% Convertible Notes. Debt Maturities As of December 31, 2023, the aggregate maturt follows (in thousands): ities of total long-term debt for the next five fiscal years and thereafter are as 2024 2025 2026 2027 2028 r Thereafteff Total $ 7,500 13,125 15,000 393,750 258,750 350,000 $ 1,038,125 Letters of credit totaling $6.9 million were outstanding as of December 31, 2023 that exist to meet credit requirements forff Company’s insurance providers. the Cash paid for interest forff million, respectively. the years ended December 31, 2023, 2022 and 2021 was $66.3 million, $56.9 million and $45.0 8. DERIVATIVE FINANCIAL INSTRUMENTS 1.75% Convertible Note Hedge Transactions and Warrant Transactions In December 2021, in connection with the 1.75% Convertible Notes offering, the Company entered into privately negotiated convertible note hedge transactions (together, the “1.75% Convertible Note Hedge Transactions”) with each of Bank of America, N.A., Wells Fargo Bank, National Association and Nomura Global Financial Products, Inc. (together, the “1.75% Convertible Note Hedge Counterpar rties”). Pursuant to the 1.75% Convertible Note Hedge Transactions, the Company acquired options to purchase the same number of shares of the Company's common stock (or 2,584,578 shares) initially underlying the 1.75% Convertible Notes at an initial strike price equal to the initial strike price of the 1.75% Convertible Notes of appr oximately $100.11 per share, subject to customary anti-dilution adjud stments. The options expire on December 1, 2028, subju ect to earlier exercise. a At the same time, the Company also entered into separate, privately negotiated warrant transactions (the “1.75% Convertible Note Warrant Transactions”) with each of the 1.75% Convertible Note Hedge Counterpar rties, pursuant to which the Company sold warrants to purchase the same number of shares of the Company's common stock (or 2,584,578 shares) underlying the 1.75% Convertible Notes, at an initial strike price of approximately $123.22 per share, subject to customaryrr anti-dilution adjud stments. The warrants have a finff al expiration date of July 25, 2029. The Company paid $57.4 million associated with the cost of the 1.75% Convertible Note Hedge Transactions and received proceeds of $43.7 million related to the 1.75% Convertible Note Warrant Transactions. The 1.75% Convertible Note Hedge Transactions are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of the 1.75% Convertible Notes and/or offsff et any cash payments the Company is required to make in excess of the principal amount of converted 1.75% Convertible Notes. However, the 1.75% Convertible Note Warrant Transactions could separately have a F-24 dilutive effect strike price of the warrants. ff on the Company's common stock to the extent that the market price per share of the common stock exceeds the As these transactions meet certain accounting criteria, Convertible Note Warrant Transactions are recorded in stockholders’ equity and are not accounted for as derivatives. the 1.75% Convertible Note Hedge Transactions and 1.75% 1.00% Convertible Note Hedge Transactions and Warrant Transactions In January 2018, in connection with the 1.00% Convertible Note offeff ring, the Company entered into privately negotiated convertible note hedge transactions (the “1.00% Convertible Note Hedge Transactions”) and at the same time also entered into separate, privately negotiated warrant transactions (the “1.00% Convertible Note Warrant Transactions”). The 1.00% , 2023 and the 1.00% Convertible Note Warrant Transactions Convertible Note Hedge Transactions expired as of February 1rr ity of the 1.00% Convertible Notes. expired as of September 20, 2023 in connection with the repayment at maturt 9. ACCRUED LIABILITIES ($ in thousands) Employee compensation and benefitsff Property taxes Customer incentives Accruer d interest Accruer d warranty Income tax payable Other Total accruerr d liabia lities $ As of December 31 2023 2022 $ 57,702 6,038 21,724 7,998 6,130 2,372 9,747 80,725 5,777 27,719 8,807 12,103 28,926 8,538 $ 111,711 $ 172,595 The table below summarizes the change in accruer d warranty liabia lities. ($ in thousands) Beginning balance Provision Settlements made (in cash or in kind) Acquisitions gg Ending balance Year Ended December 31 2023 2022 2021 $ $ 12,103 $ 13,827 $ 23,820 (29,793) — 29,918 (32,998) 1,356 6,130 $ 12,103 $ 3,872 24,202 (17,725) 3,478 13,827 F-25 10. INCOME TAXES The provision for income taxes consists of the folff lowing: ($ in thousands) Current: Federal State Foreign Total current Deferred: Federal State Foreign Total deferff red Income taxes Year Ended December 31 2023 2022 2021 $ 44,126 $ 92,783 $ 4,816 10 48,952 (3,578) 2,994 (7) (591) 23,724 56 116,563 (7,348) (2,027) 26 (9,349) $ 48,361 $ 107,214 $ 57,156 15,755 (61) 72,850 (1,854) (2,089) — (3,943) 68,907 The Company has accounted for in its 2023, 2022, and 2021 income tax provision the impact of Global Intangible Low- Taxed Income, base-erosion anti-abuse tax, interest expense limitations under Section 163(j)(( , and foreign-derived intangible income deductions, although such provisions were either not applicable or resulted in a zero or immaterial impact to the consolidated financial statements. A reconciliation of the differences between the actuat income tax rate of 21% is as follows: l provision for income taxes and income taxes at the fedff eral statutt oryrr ($ in thousands) Rate applied to pretax income State taxes, net of federal tax effeff ct Research and development tax credits Section 162(m) permanent addback Year Ended December 31 2023 2022 2021 $ 40,201 21.0 % $ 91,436 21.0 % $ 61,598 21.0 % 6,797 3.6 % 16,715 3.8 % 10,358 3.5 % (2,889) (1.5)% (4,542) (1.0)% (1,990) (0.7)% 6,315 3.3 % 7,421 1.7 % 5,825 2.0 % Excess tax benefit on stock-based compensation (3,513) (1.8)% (3,292) (0.7)% (6,035) (2.1)% Other Income taxes 1,450 0.7 % (524) (0.1)% (849) (0.3)% $ 48,361 25.3 % $ 107,214 24.7 % $ 68,907 23.4 % F-26 The composition of the deferff red tax assets and liabia lities is as folff lows: ($ in thousands) Deferred tax assets: Trade receivabla es allowance Inventory crr apitalization Inventory r rr eserves Federal NOL carryforwards State NOL carryforwards Accruer d expenses Deferred compensation Operating lease liabia lities Share-based compensation Capia talized research & experimentation costs red tax assets before valuation allowance Total deferff Less: valuation allowance Deferred tax liabia lities: Prepaid expenses Operating lease right-of-use assets Depreciation expense Intangibles Other Total deferff red tax liabia lities Net deferff red tax liabilities As of December 31 2023 2022 $ $ 1,339 3,696 8,322 417 745 20,819 750 45,371 7,045 23,751 112,255 (477) (2,948) (44,498) (46,783) (63,977) (296) 1,325 4,454 8,318 736 572 27,865 625 41,739 7,921 14,037 107,592 (459) 107,133 (2,939) (40,980) (47,050) (64,012) (544) $ $ (158,502) $ (155,525) (46,724) $ (48,392) Total deferff red tax assets, net of valuation allowance $ 111,778 $ Cash paid by the Company for income taxes was $84.3 million, $117.1 million and $46.2 million in 2023, 2022 and 2021, respectively. As of December 31, 2023 and December 31, 2022, the Company had gross federal, state, and forff eign net operating losses, of approximately $15.4 million and $17.6 million, respectively. These loss carryforwards generally expire between tax years ending December 31, 2023 and December 31, 2041. The components of the valuation allowance relate to certain acquired federal, state and foreign net operating loss carryforwards that the Company anticipates will not be utilized prior to their expiration, either due to income limitations or limitations under Section 382 of the Internal Revenue Code of 1986. The tax effeff cted values of these net operating losses are $1.2 million and $1.3 million as of December 31, 2023 and 2022, respectively, exclusive of valuation allowances of $0.5 million and $0.5 million as of December 31, 2023 and 2022, respectively. The Company is subju ect to periodic audits by domestic tax authorities. For the majoa rity of tax jurisdictions, the U.S. federal statutt e of limitations remains open forff the years 2020 and later. Uncertain tax benefitsff were immaterial as of December 31, 2023 and 2022 and activity related to uncertain tax benefitsff was immaterial forff all periods presented. 11. STOCK REPURCHASE PROGRAMRR S In December 2022, the Company's Board of Directors ("the Board") authorized an increase in the amount of the Company's common stock that may be acquired over the next 24 months under the current stock repurchase program to $100 million, including the $38.2 million remaining under the previous authorization. Approximately $77.6 million remains in the amount F-27 of the Company's common stock that may be acquired under the current stock repurchase program as of December 31, 2023. Under the stock repurchase plans, the Company made repurchases of common stock for 2023, 2022, and 2021 as follows: Shares repurchased Average price Aggregate cost (in millions) 2023 2022 2021 276,784 1,325,564 $ $ 67.95 18.8 $ $ 58.08 77.0 $ $ 612,325 79.93 48.9 The Company’s common stock does not have a stated par value. As a result, repurchases of common stock have been refleff cted, using an average cost method, as a reducd tion of common stock, additional paid-in-capital and retained earnings in the Company’s consolidated balance sheet. 12. EARNINGS PER COMMON SHARE Earnings per common share is calculated as follows: ($ in thousands except per share data) Numerator: Earnings for basic per share calculation Effeff ct of interest on potentially dilutive convertible notes, net of tax Earnings for dilutive per share calculation Denominator: Weighted average common shares outstanding - basic Weighted average impact of potentially dilutive convertible notes Effeff ct of potentially dilutive securities Weighted average common shares outstanding - diluted Earnings per common share: Basic earnings per common share Diluted earnings per common share Cash dividends paid per common share Year Ended December 31 2023 2022 2021 142,897 $ 328,196 $ 224,915 162 1,927 — 143,059 $ 330,123 $ 224,915 21,519 166 340 22,025 22,140 2,059 272 24,471 6.64 6.50 1.90 $ $ $ 14.82 13.49 1.44 $ $ $ 22,780 — 575 23,355 9.87 9.63 1.17 $ $ $ $ $ The impact on diluted earnings per share from antidilutive securities excluded froff m the calculation was immaterial for all periods presented. 13. LEASES We lease certain facilities, trailers, forff kliftsff and other assets. Leases with an initial term of 12 months or less are not recorded on the balance sheet and expense related to these short-term leases was immaterial for the years ended December 31, 2023, 2022 and 2021. Variable lease expense, principally related to trucrr ks, forff kliftsff lity rent escalators, was immaterial for the years ended December 31, 2023, 2022 and 2021. Leases have remaining lease terms of 1 to 16 years. Certain leases include options to renew forff an additional term. Where there is reasonabla e certainty to utilize a renewal option, we include the renewal option in the lease term used to calculate operating lease right-of-use assets and lease liabia lities. , and index-related faci ff F-28 Lease expense, suppl u emental cash floff w inforff mation, and other information related to leases were as follows: ($ in thousands) Operating lease cost Cash paid forff liabia lities: amounts included in the measurement of lease Operating cash floff ws for operating leases Right-of-use assets obtained in exchange for lease obligations: Operating leases Balance sheet information related to leases was as folff lows: $ $ $ ($ in thousands, except lease term and discount rate) Assets Operating lease right-of-use assets Liabilities Operating lease liabia lities, current portion Long-term operating lease liabia lities Total lease liabilities Weighted average remaining lease term, operating leases (in years) Weighted average discount rate, operating leases Year Ended December 31 2023 2022 2021 56,370 $ 50,674 $ 42,081 55,933 $ 49,938 $ 41,061 65,505 $ 50,719 $ 78,225 As of December 31 2023 2022 $ $ $ 177,717 48,761 132,444 181,205 4.8 5.4 % $ $ $ $ $ 163,674 44,235 122,471 166,706 5.1 4.4 % 57,145 48,597 37,611 24,023 16,025 24,108 207,509 (26,304) 181,205 Maturities of operating lease liabia lities were as folff lows as of December 31, 2023 (in thousands): 2024 2025 2026 2027 2028 r Thereafteff Total lease payments Less imputed interest Total The Company has additional operating leases that have not yet commenced as of December 31, 2023, and therefore, approximately $2.9 million in operating lease right-of-use assets and corresponding operating lease liabia lities were not included in our consolidated balance sheet as of December 31, 2023. These leases are expected to commence in the first quarter of fiscal 2024 with lease terms of 5 years. 14. COMMITMENTS AND CONTINGENCIES The Company is subju ect to proceedings, lawsuits, audits, and other claims arising in the normal course of business. All such matters are subject to uncertainties and outcomes that are not predictabla e with assurance. Accruar ls for these items, when applicable, have been provided to the extent that losses are deemed probabla e and are reasonabla y estimabla e. These accruals are adjud sted from time to time as developments warrant. F-29 Although the ultimate outcome of these matters cannot be ascertained, on the basis of present inforff mation, amounts already provided, availabia lity of insurance coverage and legal advice received, it is the opinion of management that the ultimate resolution of these proceedings, lawsuits, and other claims will not have a material adverse effect on the Company’s consolidated balance sheet, results of operations, or cash floff ws. In August 2019, a group of companies calling itself the Lusher Site Remediation Group (the “Group”) commenced litigation against the Company in Lusher Site Remediation Group v. Sturt gis Iron & Metal Co., Inc., et al., Case Number 3:18- cv-00506, pending in the U.S. District Court forff the Northern District of Indiana, relating to a site owned by the Company (the "Lusher Street Site"). The Group’s Second Amended Complaint, which was the first to assert claims against Patrick, asserted claims under the federal Comprehensive Environmental Response, Compensation, and Liabia lity Act (“CERCLA”), 42 U.S.C. § 9601 et seq., an Indiana state environmental statute and Indiana common law. One defendant in the case, Sturt gis Iron & Metal Co., Inc. (“Sturt gis”), subsu equently filed two cross claims against Patrick, asserting against the Company a claim for (i) contribution under CERCLA and (ii) contractuat l indemnity. The Company moved to dismiss the Group’s claims and also moved to dismiss Sturt gis’s cross claims. On August 21, 2020, the court granted Patrick’s two motions to dismiss. The Group subsu equently moved forff reconsideration of the court’s decision. On March 19, 2021, the Company received a General Notice of Potential Liabia lity from the U.S. Environmental Protection Agency (the “EPA”), pursuant to Section 107(a) of CERCLA (the “Notice”). The Notice provides that the EPA has incurred and will likely incur additional costs relative to conducting a Remedial Investigation/Feasibility Studyt ("RI/FS"), conducting Remedial Design/Remedial Action ("RD/RA"), and other investigation, planning, response, oversight, and enforcement activities related to the Lusher Street Site. Because the Company was the owner of and former operator within the Lusher Street Site and as such may be a potentially responsible party pursuant to CERCLA, the Company received the Notice and an indication that it may have a responsibility to contribute to the costs of RI/FS, RD/RA oRR s r additional mitigation effort incurred or to be incurred by the EPA. ff On September 15, 2021, the Court granted the parties Joint Motion to Stay Proceedings Pending Negotiations with the EPA. The proceedings remain subju ect to the Court-approved stay. The Company sold certain parcels of real property that the EPA contends are connected to the Superfund Site (the "Divested Properties") in January 2022 for a pretax gain on disposal of $5.5 million that is included in Selling, general and administrative expenses in the Company's consolidated statements of income forff year ended December 31, 2022. The defend and hold the Company harmless for all liabia lity and exposure, both private and to all purchaser agreed to indemnify,ff EPA claims, concerning and relating to the Divested Properties. No further proceedings occurred in the year ended December 31, 2023. As to the real properties that were not among the Divested Properties but remain the subject of the litigation, the Company does not currently believe that the litigation or the Supeu rfund Site matter are likely to have a material adverse impact on its financial condition, results of operations, or cash floff ws. However, any litigation is inherently uncertain, the EPA has yet to select a finff al remedy for the Supeu rfund Site, and any judgment or injunctive relief entered against us or any adverse settlement could materially and adversely impact our business, results of operations, finff ancial condition, and prospects. 15. COMPENSATION PLANS Stock-Based Compensation The Company has various stock option and stock-based incentive plans and various agreements whereby stock options, restricted stock awards, and SARS were made available to certain key employees, directors, and others based upon meeting various individual, divisional or company-wide performance criteria and time-based criteria. All such awards qualify aff nd are accounted for as equity awards. Equity incentive plan awards, which are granted under the Company's 2009 Omnibus Incentive Plan, are intended to retain and reward key employees for outstanding performance and efforts as they relate to the Company’s short-term and long-term objectives and its strategic plan. As of December 31, 2023, approximately 1.3 million common shares remain available for stock-based compensation grants. Stock-based compensation expense was $19.4 million, $21.8 million and $22.9 million for the years ended December 31, for stock-based compensation expense was $4.8 million, $5.4 million 2023, 2022 and 2021, respectively. Income tax benefitff and $5.8 million forff the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, there was approximately $18.2 million of total unrecognized compensation cost related to share-based compensation arrangements granted under incentive plans. That cost is expected to be recognized over a weighted-average period of approximately 17.0 months. F-30 Stock Options: p No stock options were granted durd ing the years ended December 31, 2023, 2022 and 2021. Outstanding stock options granted in prior years vest ratably over either three or four years and have nine-year contractuat l terms. ff The folff lowing tabla e summarizes the Company’s option activity: (shares in thousands) Years ended December 31 2023 2022 2021 Weighted Average Exercise Price Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares Shares Outstanding beginning of year 362 $ 43.76 368 $ — (248) 114 $ — 44.88 41.33 (1) (5) 362 $ 43.72 41.33 41.33 43.76 1,015 $ (32) (615) 368 $ 43.88 41.33 41.11 43.72 Forfeited durd ing the year Exercised durd ing the year Outstanding end of year Vested Options: Vested during the year Eligible end of year for exercise Aggregate intrinsic value ($ in thousands): Total options outstanding Options exercisabla e Options exercised 138 $ 114 $ 42.98 41.33 161 $ 223 $ 42.98 44.25 248 $ 67 $ 46.70 47.05 $ $ 6,711 6,711 $ 10,888 $ $ $ 6,204 3,716 91 $ 13,593 $ 2,268 $ 26,348 Weighted average faiff during the year r value of options granted N/A N/A N/A The aggregate intrinsic value (excess of market value over the option exercise price) in the table above is before income taxes, and assuming the Company’s closing stock price of $100.35, $60.60 and $80.69 per share as of December 31, 2023, 2022 and 2021, respectively, is the price that would have been received by the option holders had those option holders exercised their options as of that date. As of December 31, 2023, the weighted average remaining contractuat options outstanding was 5.4 years and the weighted average remaining contractuat l term forff options exercisabla e was 5.4 years. l term forff The cash received froff m the exercise of stock options was $1.4 million, $0.2 million and $4.9 million in 2023, 2022 and 2021, respectively. The income tax benefit related to the stock options exercised was $6.7 million in 2021, and immaterial in 2023 and 2022. The grant date fair value of stock options vested in 2023, 2022 and 2021 was $5.9 million, $6.9 million and $11.6 million, respectively. As of December 31, 2023, there was no unrecognized compensation expense related to the stock options. F-31 ) Stock Appreciation Rights (SARS): pp g ( No SARS were granted or forff the Company’s SARS activity: feited in the years ended December 31, 2023, 2022 and 2021. The folff lowing tabla e summarizes (shares in thousands) Total SARS: Outstanding beginning of year Exercised durd ing the year Outstanding end of year Vested SARS: Vested during the year Eligible end of year for exercise Aggregate intrinsic value ($ in thousands): Total SARS outstanding SARS exercisabla e SARS exercised Weighted average faiff during the year r value of SARS granted Years ended December 31 2023 2022 2021 Weighted Average Exercise Price Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares Shares 224 $ 64.33 224 $ 64.33 — — — — 224 $ 64.33 224 $ 64.33 485 $ (261) 224 $ 56.96 50.63 64.33 — $ — — $ — 224 $ 64.33 224 $ 64.33 85 $ 224 $ 63.86 64.33 $ $ $ 8,078 8,078 — N/A $ $ $ 383 383 — N/A $ $ $ 3,669 3,669 9,045 N/A The aggregate intrinsic value (excess of market value over the SARS exercise price) in the table above is before income taxes, and assuming the Company’s closing stock price of $100.35, $60.60 and $80.69 per share as of December 31, 2023, 2022 and 2021, respectively, is the price that would have been received by the SARS holder had that SARS holder exercised l terms. All SARS outstanding as the SARS as of that date. SARS vest ratabla y over four of December 31, 2023 were fully vested. years and have nine-year contractuat ff As of December 31, 2023, there was no unrecognized compensation expense related to the SARS. Restricted Stock: The Company’s stock-based awards include restricted stock awards. As of December 31, 2023, there was approximately $18.2 million of total unrecognized compensation expense related to restricted stock, which is expected to be recognized over a weighted-average remaining life off oximately 17.0 months. a f appr Restricted stock awards possess voting rights, are included in the calculation of actuat l shares outstanding, and include both performance- and time-based contingencies. The grant date fair value of the awards is expensed over the related service or performance period. Time-based shares cliff vff est at the conclusion of the required service period, which ranges froff m less than one year to seven years. The performance contingent shares are earned based on the achievement of a cumulative finff ancial performance target, which ranges froff m less than one year to a seven-year period and vest at the conclusion of the measurement period. F-32 The folff lowing tabla e summarizes the activity for restricted stock: (shares in thousands) Unvested beginning of year Granted durd ing the year Vested during the year Forfeited durd ing the year Unvested end of year yy Year Ended December 31 2023 2022 2021 Weighted- Average Grant Date Stock Price Weighted- Average Grant Date Stock Price Weighted- Average Grant Date Stock Price Shares Shares Shares 758 $ 331 (328) (81) 680 $ 64.38 64.56 56.64 67.81 68.47 929 $ 254 (408) (17) 758 $ 55.06 64.62 43.23 66.30 64.38 790 $ 371 (198) (34) 929 $ 50.39 67.27 60.05 50.37 55.06 Aggregate faiff $17.6 million, and $11.9 million, respectively. r values of restricted stock vested for the years ended December 31, 2023, 2022 and 2021 were $18.6 million, 16. SEGMENT INFORMATION Financial results for the Company's reportabla e segments have been prepared using a management approach, which is consistent with the basis and manner in which financial inforff mation is evaluated by the Company's Chief Operating Decision Maker (CODM) in allocating resources and in assessing performance. The Company has two reportabla e segments, Manufact ing and Distribution, which are based on its method of internal reporting, which segregates its businesses based on the way in which its CODM allocates resources, evaluates financial results, and determines compensation. The Company does not measure profitabia lity at the end market (RV, marine, MH and industrial) level. urt ff Manufacff turing – This segment includes the following products: laminated products that are utilized to produce furff niture, shelving, walls, countertops and cabinet products; cabinet doors; fiberglass bath fixturt es and tile systems; hardwood furniture; vinyl printing; RV and marine furff niture; audio systems and accessories, including amplifieff rs, tower speakers, soundbars, and subwu ooferff s; decorative vinyl and paper laminated panels; solid surface, granite, and quartz countertop fabra ication; RV painting; fabra icated aluminum products; fibff erglass and plastic components; fiberglass bath fixturt es 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 fasff cia; thermoformed shower surrounds; specialty bath and closet building products; fibff erglass and plastic helm systems and components products; treated, untreated and laminated plywood; wiring and wire harnesses; adhesives and sealants; boat towers, tops, trailers and fraff mes; 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 – The Company distributes pre-finished wall and ceiling panels; drywrr ishing products; electronics and audio systems components; appliances; marine accessories and components; wiring, electrical and plumbing products; fibff er reinforced polyester products; cement siding; raw and processed lumber; interior passage doors; roofinff g products; laminate and ceramic flooring; tile; shower doors; furniture; firff eplaces and surrounds; interior and exterior lighting products; and other miscellaneous products in addition to providing transportation and logistics services. all and drywrr all finff The accounting policies of the segments are the same as those described in Note 1 "Basis of Presentation and Significant Accounting Policies" except that segment data includes intersegment sales. Assets are identifieff d to the segments except for cash, prepaid expenses, land and buildings, and certain deferff ate division. The corporate division charges rent to the segments forff estimated market rates. The use of the land and buildings based upon intersegment sales similar to third party transactions, which reflect current market prices. The Company accounts forff ate division. The Company evaluates Company also records certain income from purchase incentive agreements at the corpor the performance of its segments and allocates resources to them based on a variety of indicators including but not limited to sales and operating income as presented in the tables below. red assets, which are identifieff d with the corpor u r r F-33 The tables below present inforff mation that is provided to the CODM of the Company as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 (in thousands): Net outside sales Intersegment sales Total sales Operating income Total assets Capia tal expenditures Depreciation and amortization Net outside sales Intersegment sales Total sales Operating income Total assets Capia tal expenditures Depreciation and amortization Net outside sales Intersegment sales Total sales Operating income Capia tal expenditures Depreciation and amortization Year Ended December 31 2023 Manufacff $ turing 2,586,783 66,474 2,653,257 321,096 2,071,500 50,771 126,431 $ Distribution 881,262 8,146 889,408 90,095 426,931 8,094 12,710 Year Ended December 31 2022 Manufacff $ turing 3,603,766 77,646 3,681,412 531,547 2,302,745 67,635 114,782 Year Ended December 31 2021 Manufacff $ turing 2,930,466 71,641 3,002,107 379,885 58,700 89,899 $ $ Distribution 1,278,106 9,491 1,287,597 136,889 407,861 3,801 11,422 Distribution 1,147,626 7,028 1,154,654 106,241 3,873 10,790 $ $ $ Total 3,468,045 74,620 3,542,665 411,191 2,498,431 58,865 139,141 Total 4,881,872 87,137 4,969,009 668,436 2,710,606 71,436 126,204 Total 4,078,092 78,669 4,156,761 486,126 62,573 100,689 F-34 A reconciliation of certain line items pertaining to the total reportable segments to the consolidated financial statements as of December 31, 2023 and 2022 and forff the years ended December 31, 2023, 2022 and 2021 is as follows (in thousands): Net sales: Total sales for reportabla e segments Elimination of intersegment sales Consolidated net sales Operating income: g p Operating income forff Unallocated corporate expenses Amortization Consolidated operating income reportabla e segments Total assets: Identifiaff bla e assets for reportabla e segments Corporate assets unallocated to segments Cash and cash equivalents Consolidated total assets p Depreciation and amortization: Depreciation and amortization forff Corporate depreciation and amortization Consolidated depreciation and amortization reportabla e segments p Capia tal expenditures: p Capia tal expenditures forff Corporate capital expenditures Consolidated capital expenditures reportabla e segments Year Ended December 31 2022 2023 2021 3,542,665 (74,620) 3,468,045 411,191 (72,297) (78,694) 260,200 $ $ $ $ 4,969,009 (87,137) 4,881,872 668,436 (99,037) (73,229) 496,170 $ $ $ $ 4,156,761 (78,669) 4,078,092 486,126 (78,085) (56,329) 351,712 As of December 31 2023 2,498,431 52,608 11,409 2,562,448 $ $ 2022 2,710,606 49,018 22,847 2,782,471 Year Ended December 31 2022 2023 2021 139,141 5,402 144,543 58,865 3,183 62,048 $ $ $ $ 126,204 4,553 130,757 71,436 8,447 79,883 $ $ $ $ 100,689 4,119 104,808 62,573 2,231 64,804 $ $ $ $ $ $ $ $ $ $ ing segment for the years ended December 31, 2023, 2022 ff Amortization expense related to intangible assets in the Manufact and 2021 was $67.6 million, $62.8 million and $46.7 million, respectively. Intangible assets amortization expense in the Distribution segment was $11.0 million, $10.4 million and $9.6 million in 2023, 2022 and 2021, respectively. urt Unallocated corporate expenses include corporate general and administrative expenses comprised of wages and other compensation, insurance, taxes, suppl tep-upu ies, travel and entertainment, professional fees adjud stments, and other. , amortization of inventory s u rr ff F-35 Majoa r Customers ing and Distribution The Company had two majoa r customers that accounted for the following sales in our Manufact segments for the years ended December 31, 2023, 2022 and 2021 and trade receivabla es balances as of December 31, 2023 and 2022 as shown in the tabla e below: urt ff Customer 1 Net sales Trade receivabla es Customer 2 Net sales Trade receivabla es 17. SUBSEQUENT Q EVENTS Year Ended December 31 2023 2022 2021 15 % 8 % 14 % 5 % 21 % 4 % 17 % 6 % 24 % 18 % ff In January 2024, the Company announced that it completed its acquisition of Sportech, LLC, a leading designer and urt er of high-value, complex component solutions sold to powersports OEMs, adjad cent market OEMs and the manufact rmarket. The aggregate purchase price for the acquisition (excluding working capital adjustments) was $315 million afteff 2027 and cash on hand. As of the purchase date, we will record a which was funded with borrowings under the Revolver dued preliminary prr the assets acquired and liabia lities assumed in connection with the acquisition. We expect to allocate a significant portion of the purchase price to identifiaff bla e intangible assets and goodwill. Certain portions of the goodwill balance will not be deductible for tax purpos es. The Company will perform its valuation of net assets, based on facts and circumstances that existed as of the transaction date, over a period not to exceed 12 months, and adjud stments will be recorded in the periods in which they are determined. urchase price allocation forff rr F-36 Exhibit 4.4 General DESCRIPTION OF COMMON STOCK We are currently authorized to issue 40,000,000 shares of common stock, without par value, and 1,000,000 shares of preferff red stock, without par value. Each share of our common stock has the same relative rights as, and is identical in all respects to, each other share of our common stock. On February 1rr 6, 2024, there were 22,382,306 shares of our common stock outstanding and no shares of preferred stock outstanding. Issuance of Common Stock Shares of common stock may be issued from time to time as our Board of Directors (the “Board”) shall determine and on such terms and forff such consideration as shall be fixed by the Board. The authorized number of shares of common stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the Company entitled to vote. Dividends and Rights Upon Liquidation. Afteff r the requirements with respect to preferff ential dividends on any preferred stock outstanding, if any, are met, the holders of our outstanding common stock are entitled to receive dividends out of assets legally availabla e at the time and in the amounts as the Board may from time to time determine. Our common stock is not convertible or exchangeable into other securities. Upon our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive the assets that are legally availabla e forff distribution on a pro rata basis, after payment of all of our debts and other liabia lities and subju ect to the prior rights of holders of any preferred stock then outstanding. Voting Rights The holders of the common stock are entitled to vote at all meetings of the shareholders and are entitled to cast one vote forff each share of common stock held by them respectively and standing in their respective names on the books of the Company. Preemptive Rights Holders of our common stock do not have preemptive rights with respect to any shares that may be issued. Shares of our common stock are not subju ect to redemption. Relevant Provisions of the Indiana Business Corporation Law The Indiana Business Corpor rr ation Law (the “IBCL”) limits some transactions between an Indiana company and any person who acquires 10% or more of the company’s common stock (an “interested shareholder”). During the fivff e- year period afteff r the acquisition of 10% or more of a company’s common stock, an interested shareholder cannot enter into a business combination with the company unless, before the interested shareholder acquired the common stock, the board of directors of the company appr a oved the acquisition of common stock or approved the business combination. Afteff r the five-year period, an interested shareholder can enter into only the following three types of business combinations with the company: (i) a business combination appr a oved by the board of directors of the company beforff e the interested shareholder acquired the common stock; (ii) a business combination appr a oved by holders of a majority of the common stock not owned by the interested shareholder; and (iii) a business combination in which the shareholders receive a price for their common stock at least equal to a formula price based on the highest price per common share paid by the interested shareholder. In addition, under Indiana law, a person who acquires shares giving that person more than 20%, 33 1/3%, and 50% of the outstanding voting securities of an Indiana corpor ration is subject to the “Control Share Acquisitions Statutt e” of the IBCL and may lose the right to vote the shares which take the acquiror over these respective levels of ownership. Before an acquiror may vote the shares that take the acquiror over these ownership thresholds, the acquiror must obtain the approval of a majoa rity of the shares of each class or series of shares entitled to vote separately on the proposal, excluding shares held by offiff cers of the corpor r ation, by employees of the corpor r ation who are directors of the corporation and by the acquiror. An Indiana corpor rr ation subject to the Control Share Acquisitions Statutt e may elect not to be covered by the statutt e by so providing in its articles of incorpor r ation or by- laws. We have adopted a provision in our Amended and Restated By-laws which states that the Control Share Acquisitions Statutt e shall not apply to the issued and outstanding shares of our common stock. Transferff Agent and Registrar The transfer agent and registrar for our common stock is Computershare. Listing Our common stock is listed on The Nasdaq Stock Market under the symbol “PATK”. PATRICK INDUSTRIES, INC. SUBSIDIARIES OF THE REGISTRANTRR Exhibit 21 Companyp y Adorn Holdings, Inc. All Counties Glass, Inc. All State Glass, Inc. Anything Boating, LLC Arran Isle, Inc. Bathroom & Closet, LLC Bristolpipe, LLC Dehco, Inc. Dowco, Inc. Dura Shower Enclosures Co., Ltd Fresno Shower Door, Inc. Front Range Stone, Inc. ation Geremarie Corpor rr G.G Schmitt & Sons, Inc. Great Lakes Boat Top, LLC Heywood Williams USA, LLC Highland Lakes Acquisition, LLC Hyperform, Inc. Seadek Marine Products Inland Plywood Company Katalyst Industries LLC KLS Doors, LLC Larry Methvin Installations, Inc. LaSalle Bristol Corporation LaSalle Bristol, LLC LaSalle Bristol, LP Madrona Stone, LLC Marine Accessories Corporation Marine Accessories Europe B.V. Marine Accessories Europe Holdco, LLC Monster Marine Products, Inc. Patrick PS Holdco, LLC Patrick Transportation, LLC Rockford Corporation ing, Inc. SEI Manufact urt ff Shanghai Daoke Trading Co, Ltd. Shower Enclosures America, Inc. Structurt al Composites, LLC y, Ltd. Sunrise Pipe and Suppl Taco Metals, LLC u rr The Tumacs Corpor ation Topline Counters, LLC Transhield, Inc. Transhield de Mexico S. de R.L. De C.V. Transport Indiana, LLC Transport Synergy, LLC rr TS Buyer Corp Tumacs Holdings LLC Tumacs LLC Wet Sounds, Inc. Xtreme Marine Corporation p State or Country of Incorporation y Delaware Califorff nia Califorff nia Tennessee Indiana Nevada Indiana Indiana Wisconsin China Califorff nia Colorado Illinois Pennsylvania Delaware Indiana Delaware Florida Michigan Texas Califorff nia Califorff nia Indiana Delaware Indiana Washington Arizona The Netherlands Delaware Delaware Indiana Indiana Arizona Indiana China Califorff nia Indiana Canada Florida Pennsylvania Washington Indiana Mexico Indiana Indiana ndiana I Pennsylvania Pennsylvania Texas Delaware CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Exhibit 23.1 We consent to thhe iincorporatiio bn byy referff ence iin Regigistra ition Statement Nos. 333-156391 on Form S-3 a dnd Regigistra ition Statement Nos. 333-165788, 333-198321, 333-236454 andd 333-238795 on Form S-8 of our repor dt datedd F bebruaryy 2rr “Compa yny”)) a dnd hthe effectiiveness of thhe Companyy' hthiis Annuall Report on Form 10-K forff 9, 2024, rella itingg to thhe fifinanciiall statements of Pat iri kck Inddustriies, Inc. ((thhe is internall controll over fiinff an ici lal repor itingg appe hth ye year e dndedd Decembber 31, 2023. ariing ig in a /s/ Deloitte & Touche LLP Chicago, Illinois , ry 29, 2024 y Februarr I, Andy L. Nemeth, certify that: CERTIFICATIONS Exhibit 31.1 1 2 3 4 I have reviewed this annual report on Form 10-K of Patrick Industries, Inc. (the “registrant”); Based on my knowledge, this report does not contain any untrue statement of a material fact a material facff statements were made, not misleading with respect to the period covered by this report; t necessary to make the statements made, in light of the circumstances under which such ff or omit to state Based on my knowledge, the financial statements, and other financial inforff mation included in this report, fairly present in all material respects the finff ancial condition, results of operations and cash floff ws of the registrant as of, aff nd for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definff ed in Exchange Act RulRR es 13a-15(e) and 15d-15(e)) and internal control over finff ancial reporting (as definff ed in Exchange Act RulRR es 13a-15(f) and 15d-15(f)) for the registrant and have: a) b) c) d) designed such disclosure controls and procedurd es, or caused such disclosure controls and procedures to be designed under our supeu rvision, to ensure that material information relating to the registrant, including its consolidated subsu idiaries, is made known to us by others within those entities, particularly durd ing the period in which this report is being prepared; designed such internal control over finff ancial reporting, or caused such internal control over finff ancial reporting to be designed under our supeu rvision, to provide reasonabla e assurance regarding the reliabia lity of finff ancial reporting and the preparation of finff ancial statements for external purpos principles; es in accordance with generally accepted accounting r evaluated the effeff ctiveness of the registrant’s disclosure controls and procedurd es and presented in this report our conclusions about the effectiveness of the disclosure controls and procedurd es, as of the end of the period covered by this report based on such evaluation; and disclosed in this report any change in the registrant’s internal control over finff ancial reporting that occurred durd ing the registrant’s most recent fisff cal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affeff cted, or is reasonabla y likely to materially affeff ct, the registrant’s internal control over finff ancial reporting; and 5 The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over finff ancial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): a) b) all significant deficiencies and material weaknesses in the design or operation of internal control over finff ancial reporting which are reasonabla y likely to adversely affect the registrant’s abia lity to record, process, summarize and report finff ancial information; and any fraff ud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over finff ancial reporting. Date:February 2rr y , 9, 2024 /s/ Andy L. Nemeth Andy L. Nemeth Chief Executive Offiff cer I, Matthew S. Filer, certify t ff hat: CERTIFICATIONS Exhibit 31.2 1 2 3 4 I have reviewed this annual report on Form 10-K of Patrick Industries, Inc. (the “registrant”); Based on my knowledge, this report does not contain any untrue statement of a material fact a material facff statements were made, not misleading with respect to the period covered by this report; t necessary to make the statements made, in light of the circumstances under which such ff or omit to state Based on my knowledge, the financial statements, and other financial inforff mation included in this report, fairly present in all material respects the finff ancial condition, results of operations and cash floff ws of the registrant as of, aff nd for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definff ed in Exchange Act RulRR es 13a-15(e) and 15d-15(e)) and internal control over finff ancial reporting (as definff ed in Exchange Act RulRR es 13a-15(f) and 15d-15(f)) for the registrant and have: a) b) c) d) designed such disclosure controls and procedurd es, or caused such disclosure controls and procedures to be designed under our supeu rvision, to ensure that material information relating to the registrant, including its consolidated subsu idiaries, is made known to us by others within those entities, particularly durd ing the period in which this report is being prepared; designed such internal control over finff ancial reporting, or caused such internal control over finff ancial reporting to be designed under our supeu rvision, to provide reasonabla e assurance regarding the reliabia lity of finff ancial reporting and the preparation of finff ancial statements for external purpos principles; evaluated the effeff ctiveness of the registrant’s disclosure controls and procedurd es and presented in this report our conclusions about the effectiveness of the disclosure controls and procedurd es, as of the end of the period covered by this report based on such evaluation; and es in accordance with generally accepted accounting r disclosed in this report any change in the registrant’s internal control over finff ancial reporting that occurred durd ing the registrant’s most recent fisff cal quarter (the company’s fourth fiscal quarter in the case of an annual report) that has materially affeff cted, or is reasonabla y likely to materially affeff ct, the registrant’s internal control over finff ancial reporting; and 5 The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over finff ancial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): a) b) all significant deficiencies and material weaknesses in the design or operation of internal control over finff ancial reporting which are reasonabla y likely to adversely affect the registrant’s abia lity to record, process, summarize and report finff ancial information; and any fraff ud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over finff ancial reporting. Date: February 2rr y , 9, 2024 /s/ Matthew S. Filer Matthew S. Filer Interim Executive Vice President - Finance, Chief Financial Offiff cer and Treasurer CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32 In connection with the Annual Report of Patrick Industries, Inc. (the “Company”) on Form 10-K forff December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officff er and Chief Financial Officer of the Company hereby certify,ff U.S.C. §1350, as adopted pursuant to §906 of the Sarbar nes-Oxley Act of 2002 that: 1) the Report fulff with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2) the information contained in the Report faiff the Company as of and forff rly presents, in all material respects, the finff ancial condition and results of operations of the periods covered in the Report. pursuant to 18 ly complies the year ended /s/ Andy L. Nemeth y Andy L. Nemeth Chief Executive Officer /s/ Matthew S. Filer Matthew S. Filer Interim Executive Vice President – Finance, Chief Financial Offiff cer and Treasurer Februar ry 29, 2024 PATRICK INDUSTRIES INC. INCENTIVE COMPENSATION RECOVERY PRR OLICY (the "Policy") Exhibit 97 1. Recovery of Excess Incentive Compensation. If Patrick Industries, Inc. (the “Companyp y”) is required to the Company’s board of directors (the “Board”) shall, unless the Board’s prepare a Restatement, Compensation Committee determines it to be Impracticable, take reasonabla y prompt action to recover all Recoverabla e Compensation froff m any Covered Person. The Company’s obligation to recover Recoverabla e Compensation is not dependent on if or when the restated finff ancial statements are fileff d. Subju ect to applicable law, the Board may seek to recover Recoverabla e Compensation by requiring a Covered Person to repay such amount ral policies to incentive to the Company; by adding “holdback” or deferff compensation; by adding post-vesting “holding” or “no transfer” policies to equity awards; by set-off of a Covered Person’s other compensation; by reducing futff urt e compensation; or by such other means or combination of means as the Board, in its sole discretion, determines to be appropriate. This Policy is in et against any Covered Person that addition to (and not in lieu of) aff may be available under appl r adoption of this Policy). The Board may, in its sole discretion and in the exercise of its business judgment, determine whether and to what extent additional action is appr opriate to address the circumstances surrounding any Restatement to minimize the likelihood of any recurrence and to impose such other discipline as it deems appropriate. icable law or otherwise (whether implemented prior to or afteff ny right of repayment, forfeiff ture or off-sff a a 2. Administration of Policy. The Board shall have fulff l authority to administer, amend or terminate this Policy. The Board shall, subju ect to the provisions of this Policy, make such determinations and opriate or interpretations and take such actions in connection with this Policy as it deems necessary, appr advisabla e. All determinations and interprr etations made by the Board shall be finff al, binding and conclusive. The Board may delegate any of its powers under this Policy to the Compensation Committee of the Board or any subcommittee or delegate thereof. a 3. Acknowledgement by Executive Offiff cers. The Board shall provide notice to and seek written acknowledgement of this Policy from each Executive Officer; provided that the failure to provide such notice or obtain such acknowledgement shall have no impact on the applicability or enforceability of this Policy. 4. No Indemnificff ation. Notwithstanding the terms of any of the Company’s organizational documents, any the loss of any corporate policy or any contract, no Covered Person shall be indemnifieff d against Recoverabla e Compensation. 5. Disclosures. The Company shall make all disclosures and filings with respect to this Policy and maintain all documents and records that are required by the applicable rules and forms of the U.S. Securities and Exchange Commission (the “SEC”) (including, without limitation, Rule 10D-1 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act icable Exchange listing standard. ”)) and any appl g a 6. Definitions. In addition to terms otherwise defined in this Policy, the folff lowing terms, when used in this Policy, shall have the following meanings: “Applicable Period” means the three (3) completed fisff cal years preceding the earlier to occur of: (i) the date that the Board, a committee of the Board, or the offiff cer or offiff cers of the Company authorized to take such action if Board action is not required, concludes, or reasonabla y should have concluded, that the Company is required to prepare a Restatement; or (ii) the date a court, regulator, or other legally authorized ” also includes, in body directs the Company to prepare a Restatement. The term “Applicable Period addition to the three (3) fiscal year period described in the preceding sentence, any transition period (that results froff m a change in the Company’s fisff cal year) within or immediately folff lowing that completed three ther,r a transition period between the last day of the Company’s previous (3) fisff cal year period; provideddd , fdd urff pp fiscal year end and the firff st day of its new fisff cal year that comprises a period of nine (9) to twelve (12) months would be deemed a completed fiscal year. “Covered Person” means any person who receives Recoverabla e Compensation. “Exchange” means any national securities exchange or national securities association upon Company has a class of securities listed. u which the “Executive Offiff cer” includes the Company’s president, principal financial officer, principal accounting offiff cer (or if there is no such accounting officff er, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person (including any executive officff er of the Company’s subsidiaries or affiff liates) who performs similar policy-making functions for the Company. At a minimum, the term “Executive Offiff cer” shall include all executive officers identifieff d in SEC filff ings pursuant to Item 401(b) of Regulation S-K, 17 C.F.R. §229.401(b). “Financial Reporting Measure” means a measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s finff ancial statements, and any measure that is aring in earnings derived wholly or in part (including “non-GAAP” finff ancial measures, such as those appe releases) froff m such measures; provided, however, that any such measure need not be presented within the Company’s finff ancial statements or included in a filing made with the SEC. Examples of Financial Reporting Measures include measures based on: revenues, net income, operating income, financial ratios, EBITDA, liquidity measures (such as freff e cash floff w), returt n measures (such as returt n on assets or return on invested capia tal), profitabia lity of one or more segments, and cost per employee. Stock price and total shareholder returt n (“TSR”) also are Financial Reporting Measures. a r exercising a normal dued process review of all the relevant facff ts and “Impracticable” means, afteff circumstances and taking all steps required by Exchange Act RulRR e 10D-1 and any applicable Exchange listing standard, the Compensation Committee determines that recovery of the Recoverabla e Compensation is impracticabla e because: (i) it has determined that the direct expense that the Company would pay to a third party to assist in enforcing this Policy and recovering the otherwise Recoverabla e Compensation would exceed the amount to be recovered; (ii) it has concluded that the recovery of the Recoverabla e Compensation would violate home country law adopted prior to November 28, 2022; or (iii) it has determined that the recovery of the Recoverabla e Compensation would cause a tax-qualifieff d retirement plan, under which benefits are broadly availabla e to the Company’s employees, to faiff l to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder. The Company must: (x) in the case of clause (i) of the preceding sentence, prior to making that determination, make a reasonabla e attempt to recover any Recoverabla e Compensation, document to recover, and provide that documentation to the Exchange; and (y) in the case of clause (ii) of the preceding sentence, obtain an opinion of home country counsel, acceptable to the Exchange, that recovery would result in such a violation, and provide that opinion to the Exchange. such reasonabla e attempt(s) “Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure; however it does not include: (i) base salaries; (ii) discretionary cash bonuses; (iii) awards (either cash or equity) that are based uponu subju ective, strategic or operational standards; and (iv) equity awards that vest solely on the passage of time. “Received” – Incentive-Based Compensation is deemed “Received” in any Company fiscal period during which the Financial Reporting Measure specified in the Incentive- Based Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation occurs afteff r the end of that period. “Recoverable Compensation” means all Incentive-Based Compensation (calculated on a pre-tax basis) Received after December 1, 2023 by a Covered Person: (i) after beginning service as an Executive Officer; (ii) who served as an Executive Offiff cer at any time durd ing the performance period for that Incentive-Based Compensation; (iii) while the Company had a class of securities listed on an Exchange; and (iv) during the Applicable Period, that exceeded the amount of Incentive-Based Compensation that otherwise would have been Received had the amount been determined based on the Financial Performing Measures, as refleff cted in the Restatement. With respect to Incentive-Based Compensation based on stock price or TSR, when the amount of erroneously awarded compensation is not subju ect to mathematical recalculation directly from the information in an accounting restatement: (x) the amount must be based on a reasonabla e estimate of the effeff ct of the Restatement on the stock price or TSR upon which the Incentive-Based Compensation Received by the Covered Person originally was based; and (y) the Company must maintain documentation of the determination of the reasonable estimate and provide such documentation to the Exchange. “Restatement” means an accounting restatement of any of the Company’s finff ancial statements due to the Company’s material noncompliance with any financial reporting requirement under U.S. securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (ofteff n referff red to as a “Big R” restatement), or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (often referred to as a “little r” restatement). A Restatement does not include situations in which finff ancial statement changes did not result from material non-compliance with ication of a change in financial reporting requirements, such as, but not limited to retrospective: (i) appl accounting principles; (ii) revision to reportabla e segment information dued ture of the Company’s internal organization; (iii) reclassification due to a discontinued operation; (iv) application of a change in reporting entity, such as froff m a reorganization of entities under common control; (v) adjustment stock splits, to provision amounts in connection with a prior business combination; and (vi) revision forff stock dividends, reverse stock splits or other changes in capital strucr to a change in the strucr ture. a Adopted by the Board of Directors at its quarterly meeting on November 16, 2023 Executive (cid:88)(cid:337)(cid:229)(cid:192)(cid:202)(cid:283)(cid:287) Board Of Directors Andy L. Nemeth Chief Executive Officer Jeffrey M. Rodino President, Recreational Vehicles Joseph M. Cerulli Tontine Associates, LLC Director since 2008 Todd M. Cleveland Chairman of the Board Director since 2008 John A. Forbes Partner Outcomes LLC and Full Sails LLC Director since 2011 Kip B. Ellis President, Powersports, Technology and Housing Andrew C. Roeder Executive Vice President - Finance, Chief Financial Officer and Treasurer Michael A. Kitson Former Fractional CFO Ascent CFO Solutions Director since 2013 Pamela R. Klyn Executive Vice President Corporate Relations and Sustainability Whirlpool Corporation Director since 2019 Derrick B. Mayes Managing Partner Bonaventure Equity, LLC Director since 2019 Hugo E. Gonzalez Executive Vice President, Operations and Chief Operating Officer Joel D. Duthie Executive Vice President Chief Legal Officer and Secretary Andy L. Nemeth Chief Executive Officer Director since 2006 Denis G. Suggs CEO LCP Transportation, LLC Director since 2019 M. Scott Welch President and CEO Welch Packaging Group Director since 2015 Stacey Amundson Charles R. Roeder Executive Vice President, Chief Human Resources Officer Executive Vice President, Sales Corporate Information Independent Registered Public Accounting Firm Deloitte & Touche LLP Chicago, IL Annual Report • 2023 Corporate Office Transfer Agent & Registrar Patrick Industries, Inc. 107 W. Franklin Street Elkhart, IN 46516 (574) 294-7511 www.patrickind.com Computershare Investor Services P.O. Box 43078 Providence, RI 02940-3078 Within the U.S., Canada and Puerto Rico: (877) 581-5548 Outside the U.S., Canada and Puerto Rico: (781) 575-2879 www.computershare.com/investor Investor Relations Stock Symbol Stephen M. O’Hara II (574) 294-7511 oharas@patrickind.com NASDAQ: PATK Company (cid:111)(cid:283)(cid:257)(cid:339)(cid:245)(cid:202) 240+ Manufacturing & Distribution Centers in the U.S. Iddaho Decor Inndiana Transport Also in: Canada China Mexico Washington Washington Seea-Dog Line SeeaLect Plastics Toopline Counters Oregon Decor Dehco Nevada LMI Patrick is a leading component solutions provider serving the RV, Marine, Powersports and Housing markets. Since 1959, Patrick has empowered manufacturers and outdoor enthusiasts to achieve next- level recreation experiences. Our customer-focused approach brings together design, manufacturing, distribution, and transportation in a full solutions model that deﬁnes us as a trusted partner and supplier of choice. Patrick is home to more than 85 leading brands, all united by a commitment to quality, customer service, and innovation. Headquartered in Elkhart, IN, Patrick employs approximately 10,000 skilled team members throughout the United States. For more information on Patrick, our brands, and products, please visit www.patrickind.com Indiana Adorn AIA Alpha Systems AMC/MSM Betterway BH Electronics Cana Cabinetry Carrerra Paint Charleston Collins & Company Creative Wood Designs Dehco Dowco Foremost Frontline Manufacturing Fusion Wood Products Gravure Ink Indiana Marine Products Indiana Transport Interior Composites Plus KRA International LaSalle Bristol* CColorado FFront Range Stone LS Manufacturing Maple City Woodworking Medallion Plastics Middlebury Hardwoods Millennium Paint Nickell Moulding Parkland Plastics Patrick Distribution* Patrick Marine Transportation Precision Painting Premier Concepts Premium Painting Revel SEI Manufacturing Sigma Wire Structural Composites of Indiana Synergy RV Transport The Studio Transhield Tumacs Covers Williamsburg Furniture Wire Design Missouri Beetterway Dowco Marine Electrical Products Tennessee BH Electronics Fishmaster Florida Marine Tanks Great Lakes Boat Top Marine Accessories Corporation Metal Moulding Monster Tower Turboswing Westland Pennsylvania Adorn Tumacs Covers North Carolina Florida Marine Tanks South Carolina EM&C GG Schmitt & Sons TACO Marine Mississip Mississippi AIA Baymont Alabama Baymont Custom Vinyls Indiana Transport Ubique Technologies California All Counties Glass Fresno Shower Door LMI MMinnesota a Spportech Arizona Custon Vinyls Rockford Fosgate Wisconsin Dowco Illinois Geremarie Gravure Ink MMichigan i Innnland Plywood NNorth Ame N th A NNorth Ame PPatrick Mar TTummacs Co PProg erican Forest P F Products erican Mouldin ng rine Transport ansport t rrine Tr n on ansport tationi t tii i overs cs Coooovers ve Grouu gressiivve Gro *up**up* Georgia Betterway BH Electronics Cana Cabinetry Coyote Manufacturing Marine Accessories Corporation XTCrbn e C Florida Design Concepts Marine Concepts a es g Co cepts Diamondback Marine GG Schmitt & Sons Hyperform Inland Plywood In Marine Accessories Corpor Ma Marine Design & Engineerin Ma Se TA eaDek ACO Marine ration ng Center Tex Texas Marine Accessories Corporation ries North American Forest Products Forest Products Transhield Transhield Wet Sounds * Additional distribution centers across the U.S.: LaSalle Bristol: Alabama, California, Florida, Georgia, Idaho, Minnesota, North Carolina, Oregon, Pennsylvania, Tennessee, Texas. Patrick Distribution: Alabama, California, Georgia, Oregon, Texas. The Progressive Group: Arizona, Colorado, Florida, Georgia, Kansas, Utah. Patrick Industries, Inc. Corporate Office 107 W. Franklin Street Elkhart, IN 46516 (800) 331-2151 / (574) 294-7511 www.patrickind.com Learn more about Patrick Industries, Inc. Annual Report • 2023

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