Patrick Industries, Inc.: PATK announces all-stock merger with LCII; waiting for cycle to turn

Research evidence excerpt

Patrick Industries, Inc.: PATK announces all-stock merger with LCII; waiting for cycle to turn

ount of 63.1M. This implies an enterprise value of $7.8B at today’s

Average Daily Value (mn) 40.26 USD

PATK price and a pro forma EV/EBITDA multiple of 7.3x compared to PATK’s current

BofA Ticker / Exchange PATK / NAS

standalone 2027 multiple of 7.6x. We also forecast year end 2027 net leverage at 2.0x.

Bloomberg / Reuters PATK US / PATK.OQ

ROE (2026E) 14.1%Regulation, OEMs, and go forward strategy

We believe there were 3 key takeaways from our discussions with PATK management. Net Dbt to Eqty (Dec-2025A) 106.6%

First, regulatory risk seems manageable given lack of overlap in key component parts

along with LCII’s focus on the aftermarket, a vertical PATK has been looking to expand. OEM- Original Equipment

Further, management seems to have addressed potential regulatory risks. Second, Manufacturer

management seems focused on communicating the value proposition to OEMs, an issue

we believe is important given the pricing power that PATK has historically shown. Lastly, LCII- LCI Industries

PATK plans to continue its small M&A roll-up strategy even as it works towards closing

RV- Recreational vehciles

and integrating this transaction.

Fundamentals to drive stock; end market currently weak

PATK shares initially declined over -10% while ending the day -4%. We believe the key

for the stock and pro forma entity going forward will be the health of the end market

consumer. In particular, RV trends (50% of pro forma revenues) have been weak with

retail market volumes down in the high-teens for the better part of this year with

wholesale shipments down a similar amount. Volumes have been bouncing around

trough levels since 2023 while retail sales have been decelerating the last several