LCII and PATK Model Updates

Research evidence excerpt

LCII and PATK Model Updates

ven a deteriorating 2026 outlook.

We may revise our estimates again pre-2Q earnings as more industry-level end

market data for 2Q is released.

On a more positive note, we await the possible signing of the bipartisan-

supported 21st Century ROAD to Housing Act which was passed in both the

Senate and House by very large margins. The bill will become law on July 10th

unless there is a presidential veto (possible given the executive branch's interest

in the passage of the SAVE America Act). Third-party experts have more of a wait-

and-see opinion regarding near-term impact to the housing market (see the linked article

from the PBS station in Chicago) although there could be more positive implications to

LCI and Patrick longer-term via efforts to lower construction/homeowner costs.

Despite a choppy near-term backdrop, there are a number of reasons we favor

PATK longer-term. Our Buy rating is driven by the company's long term performance

including in this recent tough industry backdrop. PATK also maintains a strong pipeline

of tuck-in acquisition targets (we asked about this topic on the merger call) although

perhaps LCII will be the dominant M&A focus for the time being. With some cyclical

end market lows today, there is also a reasonable case to take advantage of current

stock weakness.

LCII: While we commend the legacy strategies around the aftermarkets space,

footprint optimization/cost containment efforts (facility consolidations to be more

2H loaded), and maintaining a strong balance sheet, for now our focus is squarely

around the prospect of the PATK merger. With the retirement of CEO Jason Lippert

in June, a new Chair appointment, and an interim CEO, there is much change at the