UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June ~~30, 2019~~28, 2020

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ……………… to ………………

Commission file number 000-03922

PATRICK INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)



Indiana	35-1057796
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

��



107 WEST FRANKLIN STREET, P.O. Box 638
ELKHART,	IN	46515
(Address of principal executive offices)		(ZIP Code)

(574) 294-7511

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for 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 Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was 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, smaller reporting company, or an 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.



Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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, no par value	PATK	NASDAQ ~~Global Select Market~~

As of July ~~19, 2019,~~24, 2020, there were ~~23,868,886~~23,448,725 shares of the registrant’s common stock outstanding.

PATRICK INDUSTRIES, INC.

TABLE OF CONTENTS



	Page No.
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Condensed Consolidated Statements of ~~Financial Position~~ ~~June 30, 2019 and December 31, 2018~~	3

~~Condensed Consolidated Statements of~~ Income Second Quarter and Six Months ~~Ended~~ended June 28, 2020 and June 30, 2019 ~~and July 1, 2018~~	3

Condensed Consolidated Statements of Comprehensive Income Second Quarter and Six Months ~~Ended~~ended June 28, 2020 and June 30, 2019	4

Condensed Consolidated Statements of Financial Position June 28, 2020 and ~~July 1, 2018~~December 31, 2019	5

Condensed Consolidated Statements of Cash Flows Six Months ended June 28, 2020 and June 30, 2019	6

Condensed Consolidated Statements of Shareholders' Equity Second Quarter and Six Months ~~Ended~~ended June 28, 2020 and June 30, 2019 ~~and July 1, 2018~~	6

~~Condensed Consolidated Statements of Cash Flows~~ ~~Six Months Ended June 30, 2019 and July 1, 2018~~	87

Notes to Condensed Consolidated Financial Statements	9

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2421

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3529

ITEM 4. CONTROLS AND PROCEDURES	3630

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS	3731

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	3732

ITEM 6. EXHIBITS	3833

SIGNATURES	3934

PART 1: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~FINANCIAL POSITION (Unaudited)~~

As of
(thousands)
June 30, 2019
December 31, 2018
ASSETS

Current Assets

    Cash and cash equivalents
$ 23,572

$ 6,895
    Trade and other receivables, net
114,722

82,499
    Inventories
252,646

272,898
    Prepaid expenses and other
20,744

22,875
        Total current assets
411,684

385,167
Property, plant and equipment, net
181,523

177,145
Operating lease right-of-use assets 82,472
—
Goodwill
301,938

281,734
Intangible assets, net
349,479

382,982
Deferred financing costs, net
3,335

3,688
Other non-current assets
482

515
        TOTAL ASSETS $ 1,330,913

$ 1,231,231
LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities

    Current maturities of long-term debt
$ 10,000

$ 8,750
    Current operating lease liabilities 25,822
—
    Accounts payable
118,147

89,803
    Accrued liabilities
51,129

59,202
        Total current liabilities
205,098

157,755
Long-term debt, less current maturities, net
569,844

621,751
Long-term operating lease liabilities 57,018
—
Deferred tax liabilities, net
20,843

22,699
Other long-term liabilities
19,493

20,272
        TOTAL LIABILITIES
872,296

822,477
SHAREHOLDERS’ EQUITY

Common stock
166,086

161,436
Additional paid-in-capital
25,124

25,124
Accumulated other comprehensive loss
(5,732 )
(2,680 )
Retained earnings
273,139

224,874
        TOTAL SHAREHOLDERS’ EQUITY
458,617

408,754
        TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$ 1,330,913

$ 1,231,231

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

~~PATRICK INDUSTRIES, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF~~ INCOME (Unaudited)


	Second Quarter Ended				Six Months Ended				Second Quarter Ended				Six Months Ended
(thousands except per share data)	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018		June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
NET SALES	$	613,218	$	604,879	$	1,221,436	$	1,156,711	$	424,045	$	613,218	$	1,013,277	$	1,221,436
Cost of goods sold	500,557		490,087		1,002,227		944,165		350,324		500,557		830,075		1,002,227
GROSS PROFIT	112,661		114,792		219,209		212,546		73,721		112,661		183,202		219,209
Operating Expenses:
Warehouse and delivery	26,270		18,723		50,311		35,751		20,209		26,270		44,941		50,311
Selling, general and administrative	32,894		33,874		70,586		65,715		31,628		32,894		67,497		70,586
Amortization of intangible assets	8,268		9,140		17,257		16,267		9,778		8,268		19,379		17,257
Total operating expenses	67,432		61,737		138,154		117,733		61,615		67,432		131,817		138,154
OPERATING INCOME	45,229		53,055		81,055		94,813		12,106		45,229		51,385		81,055
Interest expense, net	8,636		6,264		17,619		10,642		10,821		8,636		21,313		17,619
Income before income taxes	36,593		46,791		63,436		84,171		1,285		36,593		30,072		63,436
Income taxes	9,177		11,931		15,171		19,243		571		9,177		8,171		15,171
NET INCOME	$	27,416	$	34,860	$	48,265	$	64,928	$	714	$	27,416	$	21,901	$	48,265

BASIC NET INCOME PER COMMON SHARE	$	1.19	$	1.44	$	2.09	$	2.65	$	0.03	$	1.19	$	0.96	$	2.09
DILUTED NET INCOME PER COMMON SHARE	$	1.18	$	1.42	$	2.07	$	2.62	$	0.03	$	1.18	$	0.95	$	2.07

Weighted average shares outstanding - Basic	23,102		24,202		23,071		24,472
Weighted average shares outstanding - Diluted	23,316		24,515		23,282		24,812
Weighted average shares outstanding – Basic									22,667		23,102		22,840		23,071
Weighted average shares outstanding – Diluted									22,932		23,316		23,098		23,282

See accompanying Notes to Condensed Consolidated Financial Statements.

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Second Quarter Ended						Six Months Ended						Second Quarter Ended						Six Months Ended
(thousands)	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018			June 28, 2020			June 30, 2019			June 28, 2020			June 30, 2019
NET INCOME	$	27,416		$	34,860		$	48,265		$	64,928		$	714		$	27,416		$	21,901		$	48,265
Other comprehensive (loss) income, net of tax:
Unrealized loss of hedge derivatives	(1,931		)	—			(2,985		)	—
Foreign currency translation loss	(94		)	(31		)	(67		)	(3		)
Total other comprehensive (loss)	(2,025		)	(31		)	(3,052		)	(3		)
Unrealized gain (loss) of hedge derivatives													464			(1,931		)	(2,542		)	(2,985		)
Other													(15		)	(94		)	(52		)	(67		)
Total other comprehensive income (loss)													449			(2,025		)	(2,594		)	(3,052		)
COMPREHENSIVE INCOME	$	25,391		34,829			45,213			64,925			$	1,163		$	25,391		$	19,307		$	45,213

See accompanying Notes to Condensed Consolidated Financial Statements.

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)



	As of
(thousands)	June 28, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	111,062		$	139,390
Trade and other receivables, net	143,614			87,536
Inventories	261,691			253,870
Prepaid expenses and other	21,086			36,038
Total current assets	537,453			516,834
Property, plant and equipment, net	184,797			180,849
Operating lease right-of-use assets	96,065			93,546
Goodwill	326,478			319,349
Intangible assets, net	344,905			357,014
Deferred financing costs, net	2,706			2,978
Other non-current assets	392			423
TOTAL ASSETS	$	1,492,796		$	1,470,993
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current maturities of long-term debt	$	5,000		$	5,000
Current operating lease liabilities	28,567			27,694
Accounts payable	115,838			96,208
Accrued liabilities	69,132			58,033
Total current liabilities	218,537			186,935
Long-term debt, less current maturities, net	673,138			670,354
Long-term operating lease liabilities	68,318			66,467
Deferred tax liabilities, net	19,056			27,284
Other long-term liabilities	20,479			22,472
TOTAL LIABILITIES	999,528			973,512
SHAREHOLDERS’ EQUITY
Common stock	173,178			172,662
Additional paid-in-capital	24,534			25,014
Accumulated other comprehensive loss	(8,292		)	(5,698		)
Retained earnings	303,848			305,503
TOTAL SHAREHOLDERS’ EQUITY	493,268			497,481
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,492,796		$	1,470,993

See accompanying Notes to Condensed Consolidated Financial Statements.

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)



	Six Months Ended
(thousands)	June 28, 2020			June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	21,901		$	48,265
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	34,689			30,247
Stock-based compensation expense	6,347			8,172
Amortization of convertible notes debt discount	3,505			3,382
Deferred income taxes	(7,346		)	231
Other	3,016			(810		)
Change in operating assets and liabilities, net of acquisitions of businesses:
Trade receivables	(55,520		)	(31,514		)
Inventories	(7,183		)	13,699
Prepaid expenses and other assets	14,908			2,368
Accounts payable, accrued liabilities and other	25,055			19,774
Net cash provided by operating activities	39,372			93,814
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(11,305		)	(18,177		)
Proceeds from sale of property, equipment and other investing activities	126			4,357
Business acquisitions, net of cash acquired	(23,838		)	(1,246		)
Net cash used in investing activities	(35,017		)	(15,066		)
CASH FLOWS FROM FINANCING ACTIVITIES
Term debt repayments	(1,250		)	(3,750		)
Borrowings on revolver	8,022			389,294
Repayments on revolver	(8,022		)	(439,627		)
Stock repurchases under buyback program	(15,550		)	—
Cash dividends paid to shareholders	(11,607		)	—
Payments related to vesting of stock-based awards, net of shares tendered for taxes	(2,860		)	(3,303		)
Payment of deferred financing costs	(58		)	(276		)
Proceeds from exercise of stock options	642			7
Payment of contingent consideration from a business acquisition	(2,000		)	(4,416		)
Net cash used in financing activities	(32,683		)	(62,071		)
Increase (decrease) in cash and cash equivalents	(28,328		)	16,677
Cash and cash equivalents at beginning of year	139,390			6,895
Cash and cash equivalents at end of period	$	111,062		$	23,572

See accompanying Notes to Condensed Consolidated Financial Statements.

PATRICK INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)


Second Quarter Ended June 28, 2020																	Second Quarter Ended June 28, 2020
(thousands)																		Common Stock				Additional Paid-in- Capital				Accumulated Other Comprehensive Loss				Retained Earnings			Total
Balance March 29, 2020																		$	170,626			$	24,534			$	(8,741	)		$	308,957		$	495,376
Net income																		—				—				—				714			714
Dividends declared																		—				—				—				(5,823		)	(5,823		)
Other comprehensive income, net of tax																		—				—				449				—			449
Issuance of shares upon exercise of common stock options																		642				—				—				—			642
Shares used to pay taxes on stock grants																		(126		)		—				—				—			(126		)
Stock-based compensation expense																		2,036				—				—				—			2,036
Balance June 28, 2020																		$	173,178			$	24,534			$	(8,292	)		$	303,848		$	493,268

Six Months Ended June 28, 2020																	Six Months Ended June 28, 2020
(thousands)																		Common Stock				Additional Paid-in- Capital				Accumulated Other Comprehensive Loss				Retained Earnings			Total
Balance December 31, 2019																		$	172,662			$	25,014			$	(5,698	)		$	305,503		$	497,481
Net income																		—				—				—				21,901			21,901
Dividends declared																		—				—				—				(11,801		)	(11,801		)
Other comprehensive loss, net of tax																		—				—				(2,594		)		—			(2,594		)
Share repurchases under buyback program																		(3,315		)	—	(480		)	—	—			—	(11,755		)	(15,550		)
Issuance of shares upon exercise of common stock options																		642				—				—				—			642
Shares used to pay taxes on stock grants																		(3,158		)		—				—				—			(3,158		)
Stock-based compensation expense																		6,347				—				—				—			6,347
Balance June 28, 2020																		$	173,178			$	24,534			$	(8,292	)		$	303,848		$	493,268

Second Quarter Ended June 30, 2019	Second Quarter Ended June 30, 2019																Second Quarter Ended June 30, 2019
(thousands)		Common Stock			Additional Paid-in- Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total				Common Stock				Additional Paid-in- Capital				Accumulated Other Comprehensive Loss				Retained Earnings			Total
Balance March 31, 2019		$	161,949		$	25,124		$	(3,707	)	$	245,723		$	429,089			$	161,949			$	25,124			$	(3,707	)		$	245,723		$	429,089
Net income		—			—			—			27,416			27,416				—				—				—				27,416			27,416
Other comprehensive loss, net of tax		—			—			(2,025		)	—			(2,025		)		—				—				(2,025		)		—			(2,025		)
Shares used to pay taxes on stock grants		(91		)	—			—			—			(91		)		(91		)		—				—				—			(91		)
Issuance of shares upon exercise of common stock options		3			—			—			—			3				3				—				—				—			3
Stock-based compensation expense		4,225			—			—			—			4,225				4,225				—				—				—			4,225
Balance June 30, 2019		$	166,086		$	25,124		$	(5,732	)	$	273,139		$	458,617			$	166,086			$	25,124			$	(5,732	)		$	273,139		$	458,617

Six Months Ended June 30, 2019
(thousands)		Common Stock			Additional Paid-in- Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total
Balance December 31, 2018		$	161,436		$	25,124		$	(2,680	)	$	224,874		$	408,754
Net income		—			—			—			48,265			48,265
Other comprehensive loss, net of tax		—			—			(3,052		)	—			(3,052		)
Shares used to pay taxes on stock grants		(3,528		)	—			—			—			(3,528		)
Issuance of shares upon exercise of common stock options		6			—			—			—			6
Stock-based compensation expense		8,172			—			—			—			8,172
Balance June 30, 2019		$	166,086		$	25,124		$	(5,732	)	$	273,139		$	458,617

Second Quarter Ended July 1, 2018
(thousands)		Common Stock			Additional Paid-in- Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total
Balance April 1, 2018		$	162,625		$	25,785		$	94		$	217,274		$	405,778
Net income		—			—			—			34,860			34,860
Other comprehensive income, net of tax		—			—			(31		)	—			(31		)
Stock repurchases under buyback program		(4,605		)	(233		)	—			(35,777		)	(40,615		)
Issuance of shares upon exercise of common stock options		40			—			—			—			40
Shares used to pay taxes on stock grants		(85		)	—			—			—			(85		)
Stock-based compensation expense		3,673			—			—			—			3,673
Balance July 1, 2018		$	161,648		$	25,552		$	63		$	216,357		$	403,620

																															PATRICK INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (cont.)	CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (cont.)																CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (cont.)
Six Months Ended July 1, 2018
Six Months Ended June 30, 2019																	Six Months Ended June 30, 2019
(thousands)		Common Stock			Additional Paid-in- Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total				Common Stock			Additional Paid-in- Capital		Accumulated Other Comprehensive Loss			Retained Earnings		Total
Balance December 31, 2017		$	163,196		$	8,243		$	66		$	199,180		$	370,685
Balance December 31, 2018																		$	161,436		$	25,124	$	(2,680	)	$	224,874	$	408,754
Net income		—			—			—			64,928			64,928				—			—		—			48,265		48,265
Other comprehensive loss, net of tax		—			—			(3		)	—			(3		)		—			—		(3,052		)	—		(3,052		)
Stock repurchases under buyback program		(6,029		)	(305		)	—			(47,751		)	(54,085		)
Shares used to pay taxes on stock grants		(2,928		)	—			—			—			(2,928		)		(3,528		)	—		—			—		(3,528		)
Issuance of shares upon exercise of common stock options		40			—			—			—			40				6			—		—			—		6
Stock-based compensation expense		7,369			—			—			—			7,369				8,172			—		—			—		8,172
Purchase of convertible notes hedges		—			(31,481		)	—			—			(31,481		)
Proceeds from sale of warrants		—			18,147			—			—			18,147
Equity component of convertible notes issuance		—			30,948			—			—			30,948
Balance July 1, 2018		$	161,648		$	25,552		$	63		$	216,357		$	403,620
Balance June 30, 2019																		$	166,086		$	25,124	$	(5,732	)	$	273,139	$	458,617

See accompanying Notes to Condensed Consolidated Financial Statements

~~PATRICK INDUSTRIES, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)~~

Six Months Ended
(thousands)
June 30, 2019
July 1, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$ 48,265

$ 64,928
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
30,247

25,439
Stock-based compensation expense
8,172

7,369
Amortization of convertible notes debt discount
3,382

2,865
Deferred income taxes
231

(1,020 )
Other
(810 )
(542 )
Change in operating assets and liabilities, net of acquisitions of businesses:

Trade receivables
(31,514 )
(29,360 )
Inventories
13,699

(9,578 )
Prepaid expenses and other assets
2,368

5,983
Accounts payable, accrued liabilities and other
19,774

25,133
Net cash provided by operating activities
93,814

91,217
CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures
(18,177 )
(14,067 )
Proceeds from sale of property, equipment and other investing activities
4,357

80
Business acquisitions, net of cash acquired
(1,246 )
(264,436 )
Net cash used in investing activities
(15,066 ) (278,423 )
CASH FLOWS FROM FINANCING ACTIVITIES

Term debt borrowings
—

36,981
Term debt repayments
(3,750 )
(5,191 )
Borrowings on revolver
389,294

782,858
Repayments on revolver
(439,627 )
(725,355 )
Stock repurchases under buyback program
—

(54,085 )
Proceeds from convertible notes offering
—

172,500
Purchase of convertible notes hedges
—

(31,481 )
Proceeds from sale of warrants
—

18,147
Payments related to vesting of stock-based awards, net of shares tendered for taxes
(3,303 )
(2,588 )
Payment of deferred financing costs
(276 )
(7,269 )
Payment of contingent consideration from a business acquisition (4,416 ) —
Other financing activities
7

26
Net cash (used in) provided by financing activities
(62,071 )
184,543
Increase (decrease) in cash and cash equivalents
16,677

(2,663 )
Cash and cash equivalents at beginning of year
6,895

2,767
Cash and cash equivalents at end of period
$ 23,572

$ 104

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

PATRICK INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



1.	BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Patrick Industries, Inc. (“Patrick”, the “Company”, "we", "our") contain all adjustments (consisting of normal recurring adjustments) that we believe are necessary to present fairly the Company’s financial position as of June ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, and its results of operations and cash flows for the ~~three~~second quarter and six months ended June 28, 2020 and June 30, ~~2019 and July 1, 2018.~~2019.

Patrick’s unaudited condensed 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 preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules or regulations. Certain immaterial reclassifications have been made to the prior period presentation to conform to the current period presentation. For a description of significant accounting policies used by the Company in the preparation of its consolidated financial statements, please refer to Note ~~2 of~~1 to the ~~Notes to~~ Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. The December 31, ~~2018~~2019 condensed consolidated statement of financial position data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Operating results for the second quarter and six months ended June ~~30, 2019~~28, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, ~~2019.~~2020.

The Company maintains its financial records on the basis of a fiscal year ending on December 31, with the fiscal quarters spanning approximately thirteen weeks. The first quarter ends on the Sunday closest to the end of the first thirteen-week period. The second and third quarters are thirteen weeks in duration and the fourth quarter is the remainder of the year. The second quarter of fiscal year ~~2019~~2020 ended on June ~~30, 2019~~28, 2020 and the second quarter of fiscal year ~~2018~~2019 ended on ~~July 1, 2018.~~June 30, 2019.

In preparation of Patrick’s condensed consolidated financial statements as of and for the second quarter and six months ended June ~~30, 2019,~~28, 2020, management evaluated all ~~material~~ subsequent events orand transactions that occurred after the balance sheet date through the date of issuance of the Form 10-Q that required recognition or disclosure in the condensed consolidated financial statements. See Note 17 for more information.



2.	RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

~~Leases~~Goodwill Impairment

In ~~February 2016,~~January 2017, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting Standards Update ~~(“ASU”~~("ASU") ~~2016-02, "Leases (Topic 842)~~", which requires in part that an entity recognize lease assets and lease liabilities on its statement of financial position for leases that were previously classified as operating leases under U.S. GAAP.

~~In July 2018, the FASB issued ASU 2018-11, "Leases (Topic 842): Targeted Improvements", which offered practical expedient alternatives to the modified retrospective adoption of Accounting Standards Codification (“ASC”) 842.~~

The Company adopted ASC 842 effective January 1, 2019, and recorded approximately $80 million in lease right-of-use assets and corresponding lease liabilities, with no material impact on the condensed consolidated statement of shareholders' equity, results of operations or cash flows. See Note 12 for further information.

~~Goodwill Impairment~~

~~In January 2017, the FASB issued ASU~~ 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". This ASU simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. The standard requires that the impairment loss be measured as the excess of the reporting unit's

carrying amount over its fair value. It eliminates the second step that requires the impairment to be measured between the implied value of a reporting unit's goodwill and its carrying value. The ~~standard is effective for annual~~Company adopted ASU 2017-04 on January 1, 2020 and ~~any interim impairment tests for periods beginning after December 15, 2019 and early~~the adoption ~~is permitted. The Company is currently evaluating~~did not have a material impact on the ~~effect of adopting this new accounting standard and has not yet determined the impact that its implementation will have on its~~ condensed consolidated financial statements.

Credit Losses

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments”, which amends certain provisions of ~~ASC~~Accounting Standards Codification ("ASC") 326, “Financial Instruments-Credit Loss”. The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities ~~will be~~are required to use a

new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. Additionally, entities ~~will be~~are required to disclose more information with respect to credit quality indicators, including information used to track credit quality by year of origination for most financing receivables. The Company adopted ASU 2016-13 on January 1, 2020 and the adoption did not have a material impact on the condensed consolidated financial statements.

Income Taxes

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", a new standard to simplify the accounting for income taxes. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years beginning after December 15, ~~2019, including interim periods within those fiscal years~~2020, with early adoption permitted. We are currently evaluating the impact of this standard on our consolidated financial statements.

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)", a new standard providing final guidance to provide temporary optional expedients and ~~will~~exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. The guidance is effective upon issuance and generally can be applied ~~as a cumulative effect adjustment to retained earnings as~~through December 31, 2022. We are currently evaluating the impact of ~~the beginning of the first reporting period for which the guidance is effective. The Company does not expect that the adoption of the ASU will have a material effect~~this standard on ~~its condensed~~our consolidated financial statements.



3.	REVENUE RECOGNITION

In the following table, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportable ~~segments,~~segment, consistent with how the Company believes the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors:


	Second Quarter Ended June 30, 2019						Second Quarter Ended June 28, 2020
(thousands)	Manufacturing		Distribution		Total Reportable Segments		Manufacturing		Distribution		Total Reportable Segments
Market type:
Recreational Vehicle	$	240,677	$	100,244	$	340,921	$	139,628	$	64,498	$	204,126
Manufactured Housing	44,739		65,200		109,939		36,407		53,907		90,314
Industrial	62,823		9,534		72,357		61,679		8,878		70,557
Marine	86,036		3,965		90,001		54,860		4,188		59,048
Total	$	434,275	$	178,943	$	613,218	$	292,574	$	131,471	$	424,045

Six Months Ended June 30, 2019
(thousands) Manufacturing Distribution Total Reportable Segments
Market type:
Recreational Vehicle $ 475,555
$ 207,802
$ 683,357
Manufactured Housing 86,942
129,016
215,958
Industrial 123,751
17,583
141,334
Marine 173,711
7,076
180,787
Total $ 859,959
$ 361,477
$ 1,221,436



	Six Months Ended June 28, 2020
(thousands)	Manufacturing		Distribution		Total Reportable Segments
Market type:
Recreational Vehicle	$	366,413	$	157,933	$	524,346
Manufactured Housing	82,012		120,671		202,683
Industrial	133,126		16,023		149,149
Marine	130,289		6,810		137,099
Total	$	711,840	$	301,437	$	1,013,277


	Second Quarter Ended July 1, 2018						Second Quarter Ended June 30, 2019
(thousands)	Manufacturing		Distribution		Total Reportable Segments		Manufacturing		Distribution		Total Reportable Segments
Market type:
Recreational Vehicle	$	291,783	$	103,379	$	395,162	$	240,677	$	100,244	$	340,921
Manufactured Housing	43,663		26,671		70,334		44,739		65,200		109,939
Industrial	64,785		9,776		74,561		62,823		9,534		72,357
Marine	62,731		2,091		64,822		86,036		3,965		90,001
Total	$	462,962	$	141,917	$	604,879	$	434,275	$	178,943	$	613,218


	Six Months Ended July 1, 2018						Six Months Ended June 30, 2019
(thousands)	Manufacturing		Distribution		Total Reportable Segments		Manufacturing		Distribution		Total Reportable Segments
Market type:
Recreational Vehicle	$	585,008	$	188,445	$	773,453	$	475,555	$	207,802	$	683,357
Manufactured Housing	82,978		49,612		132,590		86,942		129,016		215,958
Industrial	123,461		16,795		140,256		123,751		17,583		141,334
Marine	107,427		2,985		110,412		173,711		7,076		180,787
Total	$	898,874	$	257,837	$	1,156,711	$	859,959	$	361,477	$	1,221,436

Contract Liabilities

~~The following table provides information about contract balances:~~

(thousands) June 30, 2019 December 31, 2018
Receivables, which are included in trade receivables, net $ 112,872
$ 74,196
Contract liabilities $ 2,424
$ 2,642

~~Significant~~Contract liabilities, representing upfront payments from customers received prior to satisfying performance obligations, were immaterial as of the beginning and end of all periods presented and changes in ~~the~~ contract liabilities ~~balance~~were immaterial during ~~the six months ended June 30, 2019 are as follows:~~all periods presented.

(thousands) Contract Liabilities
Revenue recognized that was included in the contract liability balance at the beginning of the period $ (945 )
Increases due to cash received, excluding amounts recognized as revenue during the period $ 727



4.	INVENTORIES

Inventories consist of the following:


(thousands)	June 30, 2019			December 31, 2018			June 28, 2020			December 31, 2019
Raw materials	$	161,609		$	164,408		$	174,758		$	162,238
Work in process	13,521			12,829			14,143			14,272
Finished goods	25,939			28,341			27,617			28,446
Less: reserve for inventory obsolescence	(8,454		)	(5,354		)	(12,054		)	(10,123		)
Total manufactured goods, net	192,615			200,224			204,464			194,833
Materials purchased for resale (distribution products)	62,302			74,914			59,523			60,918
Less: reserve for inventory obsolescence	(2,271		)	(2,240		)	(2,296		)	(1,881		)
Total materials purchased for resale (distribution products), net	60,031			72,674			57,227			59,037
Total inventories	$	252,646		$	272,898		$	261,691		$	253,870



5.	GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the six months ended June ~~30, 2019~~28, 2020 by segment are as follows:


(thousands)	Manufacturing		Distribution		Total		Manufacturing			Distribution		Total
Balance - December 31, 2018	$	235,345	$	46,389	$	281,734
Balance - December 31, 2019							$	268,402		$	50,947	$	319,349
Acquisitions							6,008			—		6,008
Adjustments to preliminary purchase price allocations	9,190		11,014		20,204		(603		)	1,724		1,121
Balance - June 30, 2019	$	244,535	$	57,403	$	301,938
Balance - June 28, 2020							$	273,807		$	52,671	$	326,478

Intangible assets, net consist of the following as of June ~~30, 2019~~28, 2020 and December 31, ~~2018:~~2019:


(thousands)	June 30, 2019			Weighted Average Useful Life (in years)	December 31, 2018			Weighted Average Useful Life (in years)	June 28, 2020			Weighted Average Useful Life (in years)	December 31, 2019			Weighted Average Useful Life (in years)
Customer relationships	$	337,432		10.1	$	366,228		10.1	$	360,962		10.1	$	357,513		10.1
Non-compete agreements	16,855			5.0	19,159			4.9	15,149			5.0	16,202			5.0
Patents	16,338			9.0	1,048			8.9	16,495			14.6	16,495			14.6
Trademarks	81,922			Indefinite	82,358			Indefinite	89,058			Indefinite	88,524			Indefinite
	452,547				468,793				481,664				478,734
Less: accumulated amortization	(103,068		)		(85,811		)		(136,759		)		(121,720		)
Intangible assets, net	$	349,479			$	382,982			$	344,905			$	357,014

Changes in the carrying value of intangible assets for the six months ended June ~~30, 2019~~28, 2020 by segment are as follows:


(thousands)	Manufacturing			Distribution			Total			Manufacturing			Distribution			Total
Balance - December 31, 2018	$	304,485		$	78,497		$	382,982
Balance - December 31, 2019										$	282,123		$	74,891		$	357,014
Acquisitions										9,220			—			9,220
Amortization	(14,375		)	(2,882		)	(17,257		)	(15,838		)	(3,541		)	(19,379		)
Impairment of intangible assets ⁽¹⁾										(119		)	(1,831		)	(1,950		)
Adjustments to preliminary purchase price allocations	(13,622		)	(2,624		)	(16,246		)	138			(138		)	—
Balance - June 30, 2019	$	276,488		$	72,991		$	349,479
Balance - June 28, 2020										$	275,524		$	69,381		$	344,905

⁽¹⁾Certain immaterial operations permanently ceased activities during the second quarter of 2020. As a result, we recorded a $2.0 million pre-tax impairment of customer relationships and trademarks of these operations after determining the net carrying value of the assets was no longer recoverable. The impairment was calculated using our internal projections of discounted cash flows, which rely on Level 3 inputs in the fair value hierarchy based on the unobservable nature of the underlying data. The impairment was recorded in selling, general and administrative in our condensed consolidated statements of income for the second quarter and six months ended June 28, 2020.

Valuation of Goodwill and Indefinite-Lived Intangibles

We test goodwill and indefinite-lived intangible assets (trademarks) for impairment on an annual basis (as of September 30, 2019 for our most recent annual tests) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. Our 2019 tests indicated that there was no impairment, as fair value exceeded carrying values, and we concluded that none of our reporting units or trademarks were at risk of failing the impairment test.

Despite the excess fair value identified in our 2019 impairment tests, we assessed during the quarter and six months ended June 28, 2020 whether the impact of the COVID-19 pandemic on overall macroeconomic conditions and our operating income for the second quarter and six months ended June 28, 2020 indicated that at June 28, 2020 it was more likely than not that our goodwill and trademarks were impaired. We evaluated among other factors (i) the results of our 2019 impairment tests; (ii) our market capitalization at June 28, 2020 in relation to the carrying amount of shareholders’ equity at June 28, 2020 and to fair values determined during our 2019 impairment tests; (iii) the results of our operations during the second quarter and six months ended June 28, 2020 in relation to our projections; and (iv) our analysis of the impact on the fair values determined during our 2019 impairment tests using more recent projections and discount rates that account for various risks and uncertainties, including the duration and extent of impact to our business, related to the COVID-19 pandemic.

Based on the results of our assessment, and other than immaterial impairments discussed above, we determined it was more likely than not that our goodwill and trademarks were not impaired as of June 28, 2020. However, we are unable to predict how long the COVID-19-related conditions will persist, what additional measures may be introduced by governments or private parties, or what effect any such additional measures may have on demand for our products or those of our customers in each of our end markets. As such, we may be required to perform quantitative impairment tests in future periods preceding our annual impairment test date, and the outcome of such tests could result in an impairment of our goodwill or our trademarks.



6.	ACQUISITIONS

General

The Company ~~completed nine~~did not make any acquisitions in ~~2018, including seven~~the second quarter of 2020 and completed 3 acquisitions in the first six months of ~~2018. No~~2020 (the "2020 Acquisitions"). For the second quarter and six months ended June 28, 2020, net sales included in the Company's condensed consolidated statements of income related to the 2020 acquisitions were ~~completed~~$3.3 million and $3.8 million, respectively. Acquisition-related costs incurred in the first six months of ~~2019. Each of the 2018~~2020 were immaterial. The Company made no acquisitions was funded through borrowings under the Company’s credit facility in effect at the time of acquisition. Assets acquired and liabilities assumed in the individual acquisitions were recorded on the Company’s condensed consolidated statements of financial position at their estimated fair values as of the respective dates of acquisition. For those acquisitions where the purchase price allocation has been noted as being provisional, the Company generally is still in the process of finalizing the fair values of intangible assets, fixed assets, and, if applicable, related deferred tax assets and liabilities. In general, the acquisitions described below provided the opportunity for the Company to either establish a new presence in a particular market and/or expand its product offerings in an existing market and increase its market share and per unit content.

For each acquisition, the excess of the purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which represents the combined value of the Company’s existing purchasing, manufacturing, sales, and systems resources with the organizational talent and expertise of the acquired companies’ respective management teams to maximize efficiencies, revenue impact, market share growth and net income. The goodwill recognized is expected to be deductible for income tax purposes for each of the acquisitions with the exception of the acquisition of Marine Accessories Corporation which is expected to be partially deductible for income tax purposes, and the acquisition of LaSalle Bristol which is not deductible for income tax purposes. Intangible asset values were estimated using income based valuation methodologies. See Note 5 for information regarding the weighted average useful lives of finite-lived intangible assets.

For the second quarter ended July 1, 2018, revenue and operating income of approximately $65.0 million and $7.2 million, respectively, were included in the Company’s condensed consolidated statements of income relating to the businesses acquired in the first six months of 2018. The first six months of 2018 included revenue and operating income of approximately $77.6 million and $8.5 million, respectively, related to these acquisitions. Acquisition-related costs in the aggregate associated with the businesses acquired in the second quarter and first six months of 2018 were immaterial.2019.

~~Contingent Consideration~~

~~In connection with certain 2018 and 2017 acquisitions, if certain financial targets for~~As of June 28, 2020, the acquired businesses are achieved, the Company will be required to pay additional cash consideration. The Company has recorded a liability 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 flows and the probability of future payments. As required, the liabilities for the contingent consideration associated with each of these acquisitions will be measured quarterly at fair value.

~~The~~ aggregate fair value of the estimated contingent consideration payments was ~~$9.4~~$7.8 million, ~~$4.7~~$5.9 million of which is included in the line item "Accrued liabilities" and ~~$4.7~~$1.9 million is included in “Other long-term liabilities” on the condensed consolidated statement of financial ~~position as of June 30, 2019.~~position. At December 31, ~~2018,~~2019, the aggregate fair value of the estimated contingent consideration payments was ~~$13.8~~$9.6 million, ~~$4.4~~$2.0 million of which was included in the line item "Accrued liabilities" and ~~$9.4~~$7.6 million was included in "Other long-term ~~liabilities."~~liabilities". The liabilities for contingent consideration expire at various dates through December 2023. The contingent consideration arrangements are subject to a maximum payment amount of up to ~~$13.7~~$12.3 million in the aggregate. In the first ~~quarter~~six months of ~~2019,~~2020, the Company made cash payments of ~~approximately $4.4~~$2.0 million related to contingent consideration ~~liabilities,~~arrangements, recording a corresponding reduction to accrued liabilities.

~~2018~~2020 Acquisitions

~~Metal Moulding~~Acquisitions completed in the first six months of 2020 include the previously announced acquisitions of Maple City Woodworking Corporation, (“~~MMC”~~)

~~In February 2018, the Company completed the acquisition of the business and certain assets of Madison, Tennessee-based MMC,~~ a Goshen, Indiana-based manufacturer of ~~custom metal fabricated products, primarily for the marine market, including hinges, arm rests, brackets, panels~~hardwood cabinet doors and trim, as well as plastic products including boxes, inlay tables, steps, and related components, for a net initial purchase price of $19.9 million, plus contingent consideration payments over a one-year period based on future performance.

~~The results of operations for MMC are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition.~~

~~Aluminum Metals Company, LLC (“AMC”~~)

In February 2018, the Company completed the acquisition of the business and certain assets of Elkhart, Indiana-based AMC, a manufacturer of aluminum products including coil, fabricated sheets and extrusions, in addition to roofing products, primarilyfascia for the recreational vehicle ~~(“RV”)~~market, and SEI Manufacturing, Inc., ~~industrial, and marine markets, for~~ a ~~net purchase price of $17.8 million.~~

~~The results of operations for AMC are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition.~~

~~IMP Holdings, LLC d/b/a Indiana Marine Products (“IMP”)~~

~~In March 2018, the Company completed the acquisition of the business and certain assets of Angola,~~Cromwell, Indiana-based ~~IMP, a~~ manufacturer of ~~fully-assembled helm assemblies, including electrical wiring harnesses, dash panels, instrumentation and gauges,~~towers, T-Tops,

hardtops, rails, gates and other aluminum exterior products ~~primarily~~ for the marine ~~market, for a net initial purchase price of $18.6 million, plus subsequent contingent~~market. The total cash consideration ~~payments over a three-year period based on future performance.~~

~~The results of operations for IMP are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition.~~

~~Collins & Company, Inc. (“Collins”)~~

In March 2018, the Company completed the acquisition of the business and certain assets of Bristol, Indiana-based Collins, a distributor of appliances, trim products, fuel systems, flooring, tile, and other related building materials primarily to the RV market as well as the housing and industrial markets, for a net purchase price of $40.0 million.

The results of operations for Collins are included in the Company’s condensed consolidated financial statements and the Distribution operating segment from the date of acquisition. Changes from previously reported estimated amounts as of December 31, 2018 include a decrease to intangible assets of $3.6 million and a $3.6 million offsetting increase to goodwill. There was no material impact to the condensed consolidated statement of income related to these changes in the period in which the purchase price allocation and all purchase accounting adjustments were finalized.

~~Dehco, Inc. (“Dehco”)~~

In April 2018, the Company completed the acquisition of Dehco, a distributor and manufacturer of flooring, kitchen and bath products, adhesives and sealants, electronics, appliances and accessories, LP tanks, and other related building materials, primarily for the ~~RV market as well as the manufactured housing (“MH”), marine and other industrial markets, for a net purchase price of $52.8~~2020 Acquisitions was $25.0 million. ~~Dehco has operating facilities in Indiana, Oregon, Pennsylvania and Alabama.~~

The results of operations for Dehco are included in the Company’s condensed consolidated financial statements and the Manufacturing and Distribution operating segments from the date of acquisition. Changes from previously reported estimated amounts as of December 31, 2018 include a decrease to intangible assets of $0.3 million and a $0.3 million offsetting increase to goodwill. There was no material impact to the condensed consolidated statement of income related to these changes in the period in which the purchase price allocation and all purchase accounting adjustments were finalized.

~~Dowco, Inc. (“Dowco”)~~

In May 2018, the Company completed the acquisition of Dowco, a designer and manufacturer of custom designed boat covers and bimini tops, full boat enclosures, mounting hardware, and other accessories and components for the marine market, for a net purchase price of $56.3 million, net of cash acquired. Dowco has operating facilities in Wisconsin, Missouri, Indiana, and Minnesota.

The results of operations for Dowco are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. Changes from previously reported estimated amounts as of December 31, 2018 include a $2.7 million increase to property, plant and equipment and a $3.3 million increase to goodwill, offset by a $5.9 million decrease to intangible assets and a $0.1 in increase accounts payable and accrued

liabilities. There was no material impact to the condensed consolidated statement of income related to these changes in the period in which the purchase price allocation and all purchase accounting adjustments were finalized.

~~Marine Accessories Corporation (“MAC”)~~

In June 2018, the Company acquired 100% of the membership interests of Maryville, Tennessee-based MAC, a manufacturer, distributor and aftermarket supplier of custom tower and canvas products and other related accessories to OEMs, dealers, retailers and distributors within the marine market, as well as direct to consumers, for a net purchase price of $57.0 million, net of cash acquired.

The results of operations for MAC are included in the Company’s condensed consolidated financial statements and the Manufacturing and Distribution operating segments from the date of acquisition. Changes from previously reported estimated amounts as of December 31, 2018 include a $6.5 million decrease to intangible assets and a $1.0 million decrease to property, plant and equipment, offset by a decrease in deferred taxes and other liabilities of $1.1 million and an increase to goodwill of $6.4 million. There was no material impact to the condensed consolidated statement of income related to these changes in the period in which the purchase price allocation and all purchase accounting adjustments were finalized.

~~Engineered Metals and Composites, Inc. (“EMC”)~~

In September 2018, the Company completed the acquisition of West Columbia, South Carolina-based EMC, a designer and manufacturer of custom marine towers, frames, and other fabricated component products for OEMs in the marine industry, for a net initial purchase price of $25.3 million, plus contingent consideration over a three-month period based on future performance.

~~The results of operations for EMC are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition.~~ The preliminary purchase price ~~allocation is~~allocations are subject to ~~final review and approval,~~valuation activities being finalized, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its ~~fair value~~ estimates. ~~Changes from previously reported estimated amounts as of December 31, 2018 were immaterial.~~

~~LaSalle Bristol (“LaSalle”)~~

In November, 2018, the Company completed the acquisition of LaSalle, a distributor and manufacturer of plumbing, flooring, tile, lighting, air handling and building products for the MH, RV, and industrial markets, for a net purchase price of $51.1 million, net of cash acquired. LaSalle is headquartered in Elkhart, Indiana and operates a total of 15 manufacturing and distribution centers located in North America.

The ~~results of operations for LaSalle~~2020 Acquisitions are included in the ~~Company’s condensed consolidated financial statements~~Manufacturing segment.

2019 Acquisitions

The Company completed 3 acquisitions in 2019 ( the "2019 Acquisitions"), including the previously announced acquisitions of Topline Counters, LLC, a Sumner, Washington-based designer and manufacturer of kitchen and bathroom countertops for residential and commercial markets, and G.G. Schmitt & Sons, Inc. ("G.G. Schmitt"), a Sarasota, Florida-based designer and manufacturer of customized hardware and structural components for the ~~Manufacturing and Distribution operating segments from~~marine industry. The total cash consideration for the ~~date~~2019 Acquisitions was $53.1 million, plus contingent consideration over a one-year period based on future performance in connection with the acquisition of ~~acquisition.~~G.G. Schmitt. The preliminary purchase price ~~allocation is~~allocations are subject to ~~final review and approval,~~valuation activities being finalized, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its ~~fair value~~ estimates.

~~After adjusting for a $1.1 million increase~~ Changes to preliminary purchase accounting estimates recorded in the ~~estimated purchase price reported at December 31, 2018 due to a final working capital adjustment~~second quarter and first six months of ~~$1.1 million, changes from previously reported estimated amounts as of December 31, 2018 are~~2020 related primarily to a $6.7 million decrease to inventory, offset partly by a $0.7 million increase to accounts receivable, a $0.3 million increase to prepaid expenses and a $6.7 million increase to goodwill. There was no material impact to the ~~condensed consolidated statement of income related to these changes.~~

2019 Acquisitions were immaterial. The 2019 Acquisitions are included in the Manufacturing segment.

The following table summarizes the fair values of the assets acquired and the liabilities assumed as of the date of ~~the~~ acquisition for the ~~2018 acquisitions:~~2020 Acquisitions and the 2019 Acquisitions:

(thousands) Trade receivables Inventories Property, plant and equipment Prepaid expenses & other Intangible assets Goodwill Less: Total liabilities Less: Deferred tax liability, net Total net assets acquired
2018

MMC ⁽¹⁾
$ 1,463
$ 2,324
$ 2,085
$ —
$ 8,540
$ 7,668
$ 827
$ —
$ 21,253
AMC 3,942
5,623
2,321
39
6,550
1,755
2,463
—
17,767
IMP ⁽²⁾
1,943
4,286
1,463
13
12,920
8,803
2,930
—
26,498
Collins 2,830
9,903
1,188
5
18,430
10,237
2,586
—
40,007
Dehco 4,771
16,923
13,755
208
13,950
6,580
3,392
—
52,795
Dowco 4,053
4,498
8,566
1,240
28,435
13,732
4,178
—
56,346
MAC 3,054
6,815
7,003
284
26,190
25,669
4,226
7,767
57,022
EMC ⁽³⁾
634
1,678
2,500
—
15,750
8,267
998
—
27,831
LaSalle 8,967
39,344
8,500
6,547
5,885
10,435
28,559
41
51,078
Other 473 329
300
13
1,667
899
184
3,497
2018 Totals $ 32,130
$ 91,723
$ 47,681
$ 8,349
$ 138,317
$ 94,045
$ 50,343
$ 7,808
$ 354,094



(thousands)	Trade receivables		Inventories		Property, plant and equipment		Prepaid expenses & other		Intangible assets		Goodwill		Less: Total liabilities		Less: Deferred tax liability, net		Total net assets acquired

2020	$	962	$	1,883	$	7,913	$	17	$	9,220	$	6,008	$	1,005	$	—	$	24,998

2019⁽¹⁾	$	9,711	$	6,012	$	5,380	$	104	$	17,765	$	25,205	$	6,512	$	1,922	$	55,743

(1) Total net assets acquired for ~~MMC~~the 2019 Acquisitions reflect the preliminary estimated liability of ~~$1.4~~$2.6 million pertaining to the fair value of ~~the~~ contingent consideration based on future ~~performance.~~

~~(2) Total net assets acquired for IMP reflect the preliminary estimated liability of $7.9 million pertaining~~performance relating to the ~~fair value~~acquisition of ~~the contingent consideration based on future performance.~~

~~(3) Total net assets acquired for EMC reflect the preliminary estimated liability of $2.5 million pertaining to the fair value of the contingent consideration based on future performance.~~G.G. Schmitt.

Pro Forma Information

The following pro forma information for the second quarter and six months ended ~~July 1, 2018~~June 28, 2020 and June 30, 2019 assumes the ~~MMC, AMC, IMP, Collins, Dehco, Dowco, MAC, EMC~~2020 Acquisitions and ~~LaSalle acquisitions (which were completed in 2018)~~the 2019 Acquisitions occurred as of the beginning of the year immediately preceding each such acquisition. The pro forma information contains the actual operating results of the ~~2018 acquisitions~~2020 Acquisitions and 2019 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 information includes financing and interest expense charges based on ~~the actual~~ incremental borrowings incurred in connection with each ~~transaction as if it occurred as of the beginning of the year immediately preceding each such acquisition.~~transaction. In addition, the pro forma information includes amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of~~$2.1~~ $0.2 million for the six months ended June 28, 2020 and $0.6 million and ~~$5.0~~$1.2 million for the second quarter and six months ended ~~July 1, 2018,~~June 30, 2019, respectively.


	Second Quarter Ended		Six Months Ended		Second Quarter Ended				Six Months Ended
(thousands except per share data)	July 1, 2018		July 1, 2018		June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
Revenue	$	698,185	$	1,388,667	$	424,045	$	636,454	$	1,018,631	$	1,267,907
Net income	38,750		73,125		714		28,949		22,480		51,140
Basic net income per common share	1.60		2.99		0.03		1.25		0.98		2.22
Diluted net income per common share	1.58		2.95		0.03		1.24		0.97		2.20

The pro forma information is presented for informational purposes only and is not ~~necessarily~~ indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of ~~that time, nor is it intended to be a projection of future results.~~the periods indicated above.



7.	STOCK-BASED COMPENSATION

The Company recorded expense of $2.0 million and $6.3 million for the second quarter and six months ended June 28, 2020, respectively, for its stock-based compensation plans in the condensed consolidated statements of income. Stock-based compensation expense for the second quarter and six months ended June 28, 2020 includes a reduction of expense due to certain forfeitures and adjustments in the amount of $2.4 million. For the second quarter and six months ended June 30, 2019, the Company recorded stock-based compensation expense of $4.3 million and $3.7 million for the second quarter ended June 30, 2019 and July 1, 2018, respectively, for its stock-based compensation plans on the condensed consolidated statements of income. For the first six months of 2019 and 2018, the Company recorded $8.2 million, ~~and $7.4 million in stock-based compensation expense,~~ respectively.

The Board approved various ~~share~~stock-based grants under the Company’s 2009 Omnibus Incentive Plan in the first six months of ~~2019~~2020 totaling ~~376,186~~275,740 shares in the ~~aggregate.~~aggregate at an average fair value of $53.78 at grant date for a total fair value at grant date of $14.8 million. In addition, in the second quarter of 2020, the Board approved stock option grants representing 465,000 shares in the aggregate at an exercise price of $41.33 per share. The total cost to be expensed over the three-year vesting period will be $6.6 million, or $14.25 per share, with an underlying volatility of 42% under the Black Scholes option pricing model.

As of June ~~30, 2019,~~28, 2020, there was approximately ~~$27.9~~$30.3 million of total unrecognized compensation cost related to stock-based compensation arrangements granted under incentive plans. That cost is expected to be recognized over a weighted-average period of ~~20.9~~19.9 months.



8.	NET INCOME PER COMMON SHARE

Net income per common share is calculated for the second quarter and six months of ~~2019~~2020 and ~~2018~~2019 is as follows:


	Second Quarter Ended				Six Months Ended				Second Quarter Ended				Six Months Ended
(thousands except per share data)	June 30, 2019		July 1, 2018		June 30, 2019		April 1, 2018		June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
Net income for basic and diluted per share calculation	$	27,416	$	34,860	$	48,265	$	64,928	$	714	$	27,416	$	21,901	$	48,265
Weighted average common shares outstanding - basic	23,102		24,202		23,071		24,472		22,667		23,102		22,840		23,071
Effect of potentially dilutive securities	214		313		211		340		265		214		258		211
Weighted average common shares outstanding - diluted	23,316		24,515		23,282		24,812		22,932		23,316		23,098		23,282
Basic net income per common share	$	1.19	$	1.44	$	2.09	$	2.65	$	0.03	$	1.19	$	0.96	$	2.09
Diluted net income per common share	$	1.18	$	1.42	$	2.07	$	2.62	$	0.03	$	1.18	$	0.95	$	2.07



9.	DEBT

A summary of total debt outstanding at June ~~30, 2019~~28, 2020 and December 31, ~~2018~~2019 is as follows:


(thousands)	June 30, 2019			December 31, 2018			June 28, 2020			December 31, 2019
Long-term debt:
Revolver	$	342,000		$	392,332
Term Loan	92,500			96,250
Convertible Notes	172,500			172,500
Revolver due 2024							$	135,000		$	135,000
Term loan due 2024							96,250			97,500
7.5% senior notes due 2027							300,000			300,000
1.0% convertible notes due 2023							172,500			172,500
Total long-term debt	607,000			661,082			703,750			705,000
Less: Convertible Notes debt discount	(26,744		)	(30,125		)
Less: convertible notes debt discount, net							(19,755		)	(23,260		)
Less: senior notes deferred financing costs, net							(5,365		)	(5,844		)
Less: current maturities of long-term debt	(10,000		)	(8,750		)	(5,000		)	(5,000		)
Less: net deferred financing costs related to Term Loan	(412		)	(456		)
Less: term loan deferred financing costs, net							(492		)	(542		)
Total long-term debt, less current maturities, net	$	569,844		$	621,751		$	673,138		$	670,354

~~2018 Credit Facility~~

See Note 9 of the Notes to Consolidated Financial Statements section of the Fiscal 2018 Form 10-K regarding the Company's $800 million revolving credit loan (the “2018 Revolver”) and a $100 million term loan (the “2018 Term Loan” and, together with the 2018 Revolver, the “2018 Credit Facility”). There ~~have been~~were no material changes to any of our debt arrangements during the ~~terms~~second quarter and six months ended June 28, 2020.

Interest rates for borrowings under the revolver and term loan are the prime rate or LIBOR plus a margin. At June 28, 2020, all of the ~~2018 Credit Facility during the six month period ended June 30, 2019.~~

~~At June 30, 2019, the Company had $92.5 million outstanding~~Company's borrowings under the ~~2018 Term Loan under the LIBOR-based option,~~revolver and ~~borrowings outstanding under the 2018 Revolver of $342.0 million~~term loan were under the LIBOR-based option. The interest rate for incremental borrowings at June ~~30, 2019~~28, 2020 was LIBOR plus ~~2.00%~~1.5% (or ~~4.44%~~1.69%) for the LIBOR-based option. The fee payable on committed but unused portions of the ~~2018 Revolver~~revolver was ~~0.25%~~0.20% at June ~~30, 2019.~~28, 2020.

Total cash interest paid was $15.6 million and $6.3 million for the second quarter of 2020 and 2019, respectively, and ~~2018 was $6.3~~$18.2 million ~~and $2.7 million, respectively,~~ and $12.8 million ~~and $5.6 million~~ for the ~~comparative~~first six ~~month periods,~~months of 2020 and 2019, respectively.

~~Convertible Senior Notes~~

In January 2018, the Company issued $172.5 million aggregate principal amount of 1.00% Convertible Senior Notes due 2023 (the “Convertible Notes”). See Note 9 of the Notes to Consolidated Financial Statements section of the Fiscal 2018 Form 10-K for further information. The effective interest rate on the Convertible Notes, which includes the non-cash interest expense of debt discount amortization and debt issuance costs, was 5.25% as of June 30, 2019 and December 31, 2018. The unamortized portion of the debt discount and debt issuance costs as of June 30, 2019 and December 31, 2018 was $26.7 million and $30.1 million, respectively.



10.	DERIVATIVE FINANCIAL INSTRUMENTS

~~Convertible Note Hedge Transactions and Warrant Transactions~~

In January 2018, in connection with the Convertible Notes offering, the Company entered into privately negotiated convertible note hedge transactions (together, the “Convertible Note Hedge Transactions”) with each of Bank of America, N.A. and Wells Fargo Bank, National Association (together, the “Hedge Counterparties”), pursuant to which the Company acquired options to purchase the same number of shares of its common stock initially underlying the Convertible Notes. See Note 10 of the Notes to Consolidated Financial Statements section of the Fiscal 2018 Form 10-K for information regarding the Convertible Note Hedge Transactions.

At the same time, the Company also entered into separate, privately negotiated warrant transactions (the “Warrant Transactions”) with each of the Hedge Counterparties, pursuant to which the Company sold warrants to purchase the same number of shares of the Company’s common stock initially underlying the Convertible Notes. See Note 10 of the Notes to Consolidated Financial Statements section of the Fiscal 2018 Form 10-K for further information. There have been no material changes to the terms of the Convertible Note Hedge Transactions or the Warrant Transactions during the six month period ended June 30, 2019.

As these transactions meet certain accounting criteria, the Convertible Note Hedges Transactions and Warrant Transactions are recorded in shareholders’ equity and are not accounted for as derivatives.

~~Interest Rate Swaps~~

The ~~2018 Credit Facility~~Company's credit facility exposes the Company to ~~risk~~risks associated with the variability in interest expense associated with fluctuations in LIBOR. To partially mitigate this risk, the Company has historically entered into interest rate ~~swaps on a portion of its 2018 Credit Facility.~~swaps. As of June ~~30, 2019,~~28, 2020, the Company had a combined notional principal amount of $200.0 million of ~~variable to fixed~~ interest rate swap agreements, all of which ~~were~~are designated as cash flow hedges. These swap agreements effectively convert the interest expense associated with a portion of the ~~2018 Term Loan and a portion of the 2018 Revolver~~Company's variable rate debt from variable interest rates to fixed interest rates and have maturities ranging from February 2022 to March 2022.

~~Fair Value of Derivative Contracts~~

The following table summarizes the fair value of derivative contracts included in the ~~accompanying~~ condensed consolidated ~~balance sheets~~statements of financial position (in thousands):

Fair value of derivative liabilities

Fair value of derivative instruments

Derivatives accounted for as cash flow hedges

Balance sheet location

June 30, 2019

December 31, 2018

Balance sheet location

June 28, 2020

December 31, 2019

Interest rate swap agreements

Other long-term liabilities

6,652

2,652

Interest rate swaps

Other long-term liabilities

9,292

5,868

The interest rate swaps are comprised of over-the-counter derivatives, which are valued using models that primarily rely on observable inputs such as yield curves, which are classified as Level 2 in the fair value hierarchy.

See Note 11 for information regarding accumulated other comprehensive loss on interest rate swaps.



11.	ACCUMULATED OTHER COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

~~The Company recognized~~Accumulated other comprehensive ~~income (loss) for~~loss includes unrealized gains and losses on derivatives that qualify as hedges of cash flows, ~~unrecognized pension costs and~~ cumulative foreign currency translation and other adjustments. The activity in ~~AOCI is~~accumulated other comprehensive loss during the second quarter and six months ended June 28, 2020 and June 30, 2019 was as follows:

Second Quarter Ended June 30, 2019
(thousands) Cash Flow Hedges Defined Benefit Pension Foreign Currency Items Total
Balance at March 31, 2019 $ (3,027 ) $ (675 ) $ (5 ) $ (3,707 )
Other comprehensive loss (net of tax of $659, $0 and $0) (1,931 ) —
(94 ) (2,025 )
Balance at June 30, 2019 $ (4,958 ) $ (675 ) $ (99 ) $ (5,732 )



Second Quarter Ended June 28, 2020
(thousands)	Cash Flow Hedges			Other			Foreign Currency Items			Total
Balance at March 29, 2020	$	(7,380	)	$	(1,270	)	$	(91	)	$	(8,741	)
Other comprehensive income (loss) (net of tax (benefit) of ($158), $0 and $0)	464			—			(15		)	449
Balance at June 28, 2020	$	(6,916	)	$	(1,270	)	$	(106	)	$	(8,292	)

Six Months Ended June 30, 2019
(thousands) Cash Flow Hedges Defined Benefit Pension Foreign Currency Items Total
Balance at December 31, 2018 $ (1,973 ) $ (675 ) $ (32 ) $ (2,680 )
Other comprehensive loss (net of tax of $1,015, $0 and $0) (2,985 ) —
(67 ) (3,052 )
Balance at June 30, 2019 $ (4,958 ) $ (675 ) $ (99 ) $ (5,732 )

Second Quarter Ended July 1, 2018
(thousands) Defined Benefit Pension Foreign Currency Items Total
Balance at April 1, 2018 $ 66
28 $ 94
Other comprehensive loss (net of tax of $0 and $0) —
(31 ) (31 )
Balance at July 1, 2018 $ 66
$ (3 ) $ 63



Six Months Ended June 28, 2020
(thousands)	Cash Flow Hedges			Other			Foreign Currency Items			Total
Balance at December 31, 2019	$	(4,374	)	$	(1,270	)	$	(54	)	$	(5,698	)
Other comprehensive loss (net of tax of $882, $0 and $0)	(2,542		)	—			(52		)	(2,594		)
Balance at June 28, 2020	$	(6,916	)	$	(1,270	)	$	(106	)	$	(8,292	)

Six Months ended July 1, 2018
(thousands) Defined Benefit Pension Foreign Currency Items Total
Balance at December 31, 2017 $ 66
$ —
$ 66
Other comprehensive loss (net of tax of $0 and $0) —
(3 ) (3 )
Balance at July 1, 2018 $ 66
$ (3 ) $ 63



Second Quarter Ended June 30, 2019
(thousands)	Cash Flow Hedges			Other			Foreign Currency Items			Total
Balance at March 31, 2019	$	(3,027	)	$	(675	)	$	(5	)	$	(3,707	)
Other comprehensive loss (net of tax of $659, $0 and $0)	(1,931		)	—			(94		)	(2,025		)
Balance at June 30, 2019	$	(4,958	)	$	(675	)	$	(99	)	$	(5,732	)



Six Months Ended June 30, 2019
(thousands)	Cash Flow Hedges			Other			Foreign Currency Items			Total
Balance at December 31, 2018	$	(1,973	)	$	(675	)	$	(32	)	$	(2,680	)
Other comprehensive loss (net of tax of $1,015, $0 and $0)	(2,985		)	—			(67		)	(3,052		)
Balance at June 30, 2019	$	(4,958	)	$	(675	)	$	(99	)	$	(5,732	)

Reclassification adjustments out of accumulated other comprehensive ~~income (loss)~~loss were immaterial for all periods presented.



12.	LEASES

The Company adopted the provisions of ASC 842 on January 1, 2019 using the modified retrospective approach as of the effective date of ASC 842 (the effective date method). Under the effective date method, financial results in periods reported prior to 2019 are unchanged.

As a result of the adoption of ASC 842, operating leases for certain warehouses, buildings, forklifts, trucks, trailers and other equipment are now recognized as right-of-use assets and corresponding short-term and long-term lease liabilities. The Company utilized a package of available practical expedients in the adoption of ASC 842, which, among them, does not require the reassessment of operating versus capital lease classification.

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 is immaterial. Lease and non-lease components in the fixed base rent of facility and equipment leases are included as a single component and accounted for as a lease. Pursuant to ASC 842, the Company elected to use the remaining non-cancellable lease term as of January 1, 2019 in determining the lease term at the date of adoption and the corresponding incremental borrowing rate for such leases. Variable lease expense, principally related to trucks, forklifts, and index-related facility rent escalators, was immaterial for the quarter and six months ended June 30, 2019. Leases have remaining lease terms of one year to ten years. Certain leases include options to renew for an additional term. Where there is reasonable 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 liabilities.

Lease expense, supplemental cash flow information, and other information related to leases were as follows:



	Second Quarter Ended
(thousands)	June 28, 2020		June 30, 2019
Operating lease cost	$	8,399	$	7,901

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	8,279	$	6,875

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	5,474	$	8,668


					Six Months Ended
(thousands)	Second Quarter Ended		Six Months Ended		June 28, 2020		June 30, 2019
	June 30, 2019		June 30, 2019
Operating lease cost	$	7,901	$	15,688	$	16,568	$	15,688

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	6,875	$	13,599	$	16,362	$	13,599

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	8,668	$	9,245	$	17,902	$	9,245

Balance sheet information related to leases was as follows:



(thousands, except lease term and discount rate)	June 28, 2020		December 31, 2019
Assets
Operating lease right-of-use assets	$	96,065	$	93,546
Liabilities
Operating lease liabilities, current portion	$	28,567	$	27,694
Long-term operating lease liabilities	68,318		66,467
Total lease liabilities	$	96,885	$	94,161



Weighted average remaining lease term, operating leases (in years)	4.1		4.2
Weighted average discount rate, operating leases	3.7	%	3.7	%

~~Balance sheet information related to leases was as follows:~~

(thousands, except lease term and discount rate) June 30, 2019
Assets
Operating lease right-of-use assets $ 82,472
Liabilities
Operating lease liabilities, current portion $ 25,822
Long-term operating lease liabilities 57,018
Total lease liabilities $ 82,840



~~Weighted average remaining lease term, operating leases (in years)~~	~~4.13~~
~~Weighted average discount rate, operating leases~~	~~3.98~~	%

Maturities of lease liabilities were as follows at June ~~30, 2019:~~28, 2020:


(thousands)
2019 (excluding the six months ended June 30, 2019)	$	15,033
2020	25,583
2020 (excluding the six months ended June 28, 2020)				$	16,235
2021	19,254			28,873
2022	12,547			22,920
2023	8,184			17,072
2024				11,341
Thereafter	9,465			7,955
Total lease payments	90,066			104,396
Less imputed interest	(7,226		)	(7,511		)
Total	$	82,840		$	96,885

~~Disclosures related~~Leases have remaining lease terms of one year to ~~periods prior to the adoption of ASC 842:~~

~~Maturities of lease liabilities were as follows at December 31, 2018:~~

(thousands)
2019 $ 29,345
2020 23,344
2021 16,165
2022 9,602
2023 5,357
Thereafter 4,883
Total $ 88,696

ten years.



13.	FAIR VALUE MEASUREMENTS

The carrying amounts of cash equivalents, representing government and other money market funds traded in an active market, are reported on the condensed consolidated statements of financial position as a component of "Cash and cash equivalents". The carrying amount of cash equivalents, valued using ~~level~~Level 1 inputs ~~approximated~~and approximating fair value asbecause of their relatively short maturities, was approximately $90.0 million and $132.6 million at June ~~30, 2019~~28, 2020 and December 31, ~~2018 because~~2019, respectively. The estimated fair value of ~~the relatively short maturities of these financial instruments.~~our senior notes, calculated using Level 2 inputs, was approximately $306.2 million and $320.3 million at June 28, 2020 and December 31, 2019, respectively. The carrying amounts of ~~the 2018 Term Loan~~our term loan and ~~the 2018 Revolver,~~our revolver, valued using ~~level~~Level 2 inputs, approximated fair value as of June ~~30, 2019~~28, 2020 and December 31, ~~2018, respectively,~~2019 based upon terms and conditions available to the Company at those dates in comparison to the terms and conditions of its outstanding debt. The estimated fair value of ~~the Convertible Notes,~~our convertible notes, calculated using Level 2 inputs, was approximately ~~$156.4~~$166.6 million and ~~$130.3~~$162.5 million as of June ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, respectively. The estimated fair value of the Company's interest rate swaps are valued using Level 2 inputs and discussed in further detail in Note 10. The estimated fair value of the Company's contingent consideration is valued using Level 3 inputs and is discussed further in Note 6.



14.	INCOME TAXES

The effective tax rate in the second quarter of 2020 and 2019 was 44.4% and ~~2018 was~~ 25.1% ~~and 25.5%~~, respectively, and the effective tax rate for the comparable six month periods was ~~23.9%~~27.2% and ~~22.9%~~23.9%, respectively. The effective tax rate for the ~~periods presented~~second quarter and six months of 2020 reflects the impact of $2.2 million of permanent tax differences due to certain Coronavirus Aid, Relief, and Economic Security Act payroll tax credits. In addition, the effective tax rate for the first six months of 2019 includes the impact of the recognition of excess tax benefits on share-based compensation that was recorded as a reduction to income tax expense upon realization in the amount of ~~$0.1 million~~ ~~and$0.1~~ ~~million in~~$0.9 million.

Cash paid for income taxes for the second quarter and six months of ~~2019 and 2018, respectively, and $0.9 million and $2.2 million for the comparable six month 2019 and 2018 periods, respectively.~~

2020 was immaterial. The Company paid income taxes of $21.1 million and ~~$15.4~~$22.6 million in the second quarter ~~of 2019~~ and ~~2018, respectively, and $22.6 million and $15.4 million in the first~~ six months of 2019, ~~and 2018,~~ respectively.



15.	SEGMENT INFORMATION

The Company has ~~two~~2 reportable segments, Manufacturing and Distribution, which are ~~those~~ based on its method of internal reporting, which segregates its businesses ~~by product category~~based on the manner in which its chief operating decision maker allocates resources, evaluates financial results, and ~~production/distribution process.~~

determines compensation. The tables below present ~~unaudited~~ information about the sales and operating income of those segments.



Second Quarter Ended June 28, 2020
(thousands)	Manufacturing		Distribution		Total
Net outside sales	$	292,574	$	131,471	$	424,045
Intersegment sales	5,114		1,085		6,199
Total sales	297,688		132,556		430,244
Operating income	22,410		6,938		29,348



Second Quarter Ended June 30, 2019
(thousands)	Manufacturing		Distribution		Total
Net outside sales	$	434,275	$	178,943	$	613,218
Intersegment sales	8,331		1,118		9,449
Total sales	442,606		180,061		622,667
Operating income	48,787		10,800		59,587

Second Quarter Ended July 1, 2018
(thousands) Manufacturing Distribution Total
Net outside sales $ 462,962
$ 141,917
$ 604,879
Intersegment sales 9,912
1,075
10,987
Total sales 472,874
142,992
615,866
Operating income 64,989
10,196
75,185



Six Months Ended June 28, 2020
(thousands)	Manufacturing		Distribution		Total
Net outside sales	$	711,840	$	301,437	$	1,013,277
Intersegment sales	12,687		2,385		15,072
Total sales	724,527		303,822		1,028,349
Operating income	68,114		16,906		85,020



Six Months Ended June 30, 2019
(thousands)	Manufacturing		Distribution		Total
Net outside sales	$	859,959	$	361,477	$	1,221,436
Intersegment sales	16,051		2,283		18,334
Total sales	876,010		363,760		1,239,770
Operating income	93,224		19,091		112,315

Six Months Ended June 30, 2019

(thousands) Manufacturing Distribution Total
Net outside sales $ 859,959
$ 361,477
$ 1,221,436
Intersegment sales 16,051
2,283
18,334
Total sales 876,010
363,760
1,239,770
Operating income 93,224
19,091
112,315

Six Months Ended July 1, 2018
(thousands) Manufacturing Distribution Total
Net outside sales $ 898,874
$ 257,837
$ 1,156,711
Intersegment sales 19,282
1,743
21,025
Total sales 918,156
259,580
1,177,736
Operating income 117,912
17,486
135,398

The following table presents a reconciliation of segment operating income to consolidated operating income:


	Second Quarter Ended						Six Months Ended						Second Quarter Ended						Six Months Ended
(thousands)	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018			June 28, 2020			June 30, 2019			June 28, 2020			June 30, 2019
Operating income for reportable segments	$	59,587		$	75,185		112,315			135,398			$	29,348		$	59,587		$	85,020		$	112,315
Unallocated corporate expenses	(6,090		)	(12,990		)	(14,003		)	(24,318		)	(7,464		)	(6,090		)	(14,256		)	(14,003		)
Amortization	(8,268		)	(9,140		)	(17,257		)	(16,267		)	(9,778		)	(8,268		)	(19,379		)	(17,257		)
Consolidated operating income	$	45,229		$	53,055		$	81,055		$	94,813		$	12,106		$	45,229		$	51,385		$	81,055

Unallocated corporate expenses include corporate general and administrative expenses comprised of wages, insurance, taxes, supplies, travel and entertainment, professional fees and other.



16.	STOCK REPURCHASE PROGRAMS

In ~~2018,~~March 2020, the Board approved a new stock repurchase program for up to $50 million of its common stock, ~~as well as two additions totaling $87.9 million to this program.~~including amounts remaining under previous authorizations. Approximately ~~$30.3~~$43.5 million remains in the amount of the Company's common stock that may be acquired under the current stock repurchase ~~program.~~program as of June 28, 2020. NaN stock repurchases were made in the second quarter of 2020. In the first six months 2020, the Company repurchased 456,155 shares of its common stock at an average price of $34.09 per share at an aggregate cost of $15.6 million. The Company did not repurchase any of its common stock in the second quarter and first six months of 2019. In the second quarter of 2018, the Company repurchased 714,600 shares of its common stock at an average price of $56.83 per share at an aggregate cost of $40.6 million. In the first six months of 2018, the Company repurchased 935,695 shares of its common stock at an average price of $57.80 per share at an aggregate cost of $54.1 million.



17.	~~RELATED PARTY TRANSACTIONS~~SUBSEQUENT EVENT

In ~~the first six months of 2019,~~August 2020, the Company ~~entered into transactions with companies affiliated with two~~announced the completion of ~~its independent Board members. The~~the acquisition of Inland Plywood Company ~~purchased approximately $0.5 million~~(“Inland”), a supplier, laminator and wholesale distributor of ~~corrugated packaging materials from Welch Packaging Group, an independently owned company established by M. Scott Welch who serves~~treated, untreated, and laminated plywood, medium density overlay panels, and other specialty products, primarily serving the marine market as ~~its President and CEO. The Company also sold approximately $0.4 million of RV component products to DNA Enterprises, Inc. ("DNA"). Walter E. Wells' son serves~~well as the ~~President~~recreational vehicle and industrial markets for a net initial purchase price of ~~DNA. Walter E. Wells retired from Patrick's Board on May 15, 2019.~~$46.0 million. Inland is headquartered in Pontiac, Michigan with an additional facility located in Cocoa, Florida. The acquisition of Inland includes the acquisition of working capital, machinery and equipment, and real estate.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and Notes thereto included in Item 1 of this Report. In addition, this MD&A contains certain statements relating to future results which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. See “Information Concerning Forward-Looking Statements” on ~~pages 34 and 35~~page 29 of this Report. The Company undertakes no obligation to update these forward-looking statements.

~~The MD&A is divided into seven major sections:~~

~~OVERVIEW OF MARKETS AND RELATED INDUSTRY PERFORMANCE~~

~~REVIEW OF CONSOLIDATEDOPERATINGRESULTS~~

~~Second Quarter and Six Months Ended June 30, 2019 Compared to 2018~~

~~Use of Financial Metrics~~

~~REVIEW BY BUSINESS SEGMENT~~

~~Second Quarter and Six Months Ended June 30, 2019 Compared to 2018~~

~~Unallocated Corporate Expenses~~

~~LIQUIDITY AND CAPITAL RESOURCES~~

~~Cash Flows~~

~~Summary of Liquidity and Capital Resources~~

~~CRITICAL ACCOUNTING POLICIES~~

~~OTHER~~

~~Seasonality~~

~~INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS~~

OVERVIEW OF MARKETS AND RELATED INDUSTRY PERFORMANCE

~~Summary~~

The second quarter of 2020 exhibited distinct trends in each month of April, May and June, which are historically among our strongest sales months, as we responded to COVID-19 market volatility. Beginning in late March and early April of 2020, we temporarily curtailed production in certain of our facilities in alignment with reductions in OEM customer production levels, which resulted in a significant decline in revenue during April from each of our end markets. Cost reduction measures implemented at the end of the first ~~six months~~quarter of ~~2019 reflected~~2020, in order to more closely align our direct and indirect labor costs with the decreased level of business activities, helped to mitigate the financial impact of ~~planned end market diversification and~~ the ~~execution~~revenue

decline in April. These cost reduction measures also positively impacted the rest of ~~our organic growth, strategic and operational initiatives. The gap between wholesale production and retail shipments in the recreational vehicle ("RV") market continued to increase in~~ the second quarter of ~~2019, as wholesale unit shipments decreased at double-digit rates while retail shipments declined at single-digit rates. As RV dealers continued~~2020. In early May 2020 our facilities started to ~~align inventory levels with retail demand, RV original equipment manufacturers ("OEMs") continued to adjust~~incrementally increase production levels as demand began to recover in our end markets, and ~~we expect OEM production~~the majority of our direct labor force, many of whom had been furloughed with benefits in April, returned to ~~align with retail~~work in our RV, marine, MH and industrial facilities. While the first half of May 2020 was impacted by the temporary shutdowns in operations, the second half of May 2020 experienced a strong increase in end market demand once dealer inventory levels are aligned with retail demand. We believe that overall dealer sentiment at recent RV shows thus far in 2019 has been positive and retail traffic and sales are progressing well duringcompared to the ~~year.~~

~~The Company has been able to continue to increase its content per unit in all markets despite the additional headwinds related to inclement weather in many parts~~first half of the ~~country, uncertainty regarding~~month. This momentum continued in June 2020, where our revenues from the ~~near-term direction~~RV and industrial markets increased from the prior year, while revenues from the marine and MH markets recovered more gradually but still exhibited a positive trajectory.

While current trends in our end markets are encouraging, we believe the combination of ~~interest rates, uncertainty around tariffs,~~our strong financial position, our available liquidity, the flexibility of our highly variable cost operating model, and ~~commodity cost volatility. Industry fundamentals and demographics within each~~the diversification of our end markets ~~remain strong. In addition,~~and the geographic regions in which we ~~carried a higher operating cost structure compared~~operate will help us to ~~revenues~~manage through any future volatility in our business caused by the ~~second quarter~~pandemic, while allowing us to take advantage of opportunities that may arise in our markets.

The safety and ~~first six months of 2019 in anticipation of expected improving retail demand in all four~~well-being of our ~~primary markets and~~ i~~n order~~team members continue to be in a ~~position~~key priority during the COVID-19 pandemic. We have successfully implemented extensive safety measures to ~~respond quickly~~adapt to ~~anticipated increased demand levels as~~this new environment. Those measures have included modifying workspaces, continuing social distancing policies, implementing new personal protective equipment or health screening policies at our facilities, and other industry best practices needed to continue to maintain a healthy and safe environment for our employees during the ~~RV dealer inventories reach equilibrium.~~pandemic.

~~Our diversified market penetration in the marine~~Second Quarter and our residential and commercial industrial markets, which we have been strategically targeting, has helped to offset wholesale shipment declines in the second quarter and first half of 2019 in our two largest market sectors, RV and manufactured housing ("MH"). At the same time, we achieved organic revenue growth in the first six months of 2019 and realized savings related to synergistic opportunities resulting from acquisitions we have made in the last two years.Six Months 2020 Financial Overview

RVRecreational Vehicle ("RV") Industry

The RV industry is our ~~primary~~largest market and comprised 48% and 56% of the Company’s sales in ~~both~~ the second quarter ended June 28, 2020 and ~~first~~June 30, 2019, respectively, and 52% and 56% for the comparative 2020 and 2019 six ~~months of 2019.~~month periods. Sales ~~from~~to the RV industry decreased ~~14% and 12%~~40% in the second quarter of 2020 and 23% in the first six months, ~~of 2019,~~ respectively, compared to the prior year periods.

According to the Recreation Vehicle Industry Association, ~~(“RVIA”),~~ wholesale shipments totaled 75,663 units in the second quarter of 2020, decreasing 35% compared to 116,605 units in the second quarter of 2019, a decline of 13% compared to 134,502 units in the second quarter of 2018. Towable units and motorized units, which accounted for 89% and 11%, respectively, of second quarter 2019 wholesale units, were down 13% and 18% compared to the prior year quarter.2019. Wholesale unit shipments infor the first six months of ~~2019~~2020 decreased ~~20% versus~~19% for the first six months of 2020, totaling 176,067 units compared to 216,581 units in the prior year period.

~~We continue~~ Retail unit sales are estimated to ~~believe that~~have decreased 17% and 13% during the ~~future~~second quarter and first six months of 2020, respectively. Decreases in wholesale and retail ~~demand trajectory remains positive based on new and younger buyers and the emergence of incremental repeat buyers~~RV shipments in the ~~channel, increased participation by millennials, the continued shift~~second quarter and first six months of 2020 are largely attributed to ~~smaller travel trailers, and overall economic conditions. In addition, used RV inventory levels remain low with rising prices, supporting the demand for new RVs in the long-term.~~

The RVIA’s latest published expectations for 2019 project wholesale unit shipments to range from approximately 396,000 units to 431,000 units, representing a decline in the range of 11% to 18% from 2018. We currently anticipate thatCOVID-19 market disruptions. Based on our estimates, RV dealer inventories ~~currently~~at the end of the second quarter of 2020 were at their lowest level since 2014 due to a combination of reduced wholesale shipments by the OEMs during the quarter and a recovery in ~~five years, will continue to normalize as we progress through the third quarter of 2019 and will support a return to wholesale shipment levels aligned more closely with~~ retail ~~demand~~sales in the ~~third quarter~~latter part of ~~2019~~May and ~~final six months of 2019.~~

We have continued to capture market share through our strategic acquisitions, line extensions, and the introduction of new and innovative products and have a favorable view of growth for the RV industry based on a number of factors including:

~~Attractive industry demographic trends with new and younger buyers entering the market and baby boomers reaching retirement age;~~

~~Readily available financing and improving consumer credit;~~

~~New and innovative products coming to market;~~

~~Increased strength in the overall economic environment, including lower unemployment rates, improving trends in wages and improving consumer confidence levels; and~~

~~The value of the travel and leisure lifestyle related to spending quality time with families.~~throughout June 2020.

Marine Industry

Sales to the marine industry, which represented approximately 14% ~~and 15%~~ of the Company's consolidated net sales in the second quarter of 2020 and 2019, decreased 34% in the second quarter of 2020 compared to the prior year quarter. For the first six months of 2020 and 2019, sales to the marine industry represented 13% and 15% of consolidated net sales, respectively, ~~increased 39% and 64%~~declining 24% in 2020 compared to the ~~second quarter and first six months of 2018, respectively.~~prior year period.

For the second quarter ~~and first six months~~ of ~~2019,~~2020, overall marine retail unit shipments in the powerboat sector, which is the Company's primary marine market, decreased ~~approximately 6% and~~an estimated 7%, ~~respectively,~~ with aluminum fishing sales decreasing ~~13%~~an estimated 11%; pontoon sales decreasing an estimated 3%; fiberglass sales decreasing an estimated 10%; and ski and wake sales increasing an estimated 1%. Wholesale unit shipments declined an estimated 39% during the quarter, reflecting the impact of COVID-19 OEM production shutdowns. For the first six months of 2020, overall marine retail unit shipments in the powerboat sector decreased an estimated 7%, with aluminum fishing sales decreasing an estimated 10%; pontoon sales decreasing an estimated 4%; fiberglass sales decreasing an estimated 9%; and ski and wake sales virtually flat. Wholesale unit shipments declined an estimated 27% during the first six months of 2020, due mostly to temporary OEM production shutdowns.

Manufactured Housing ("MH") Industry

Sales to the MH industry, which represented 21% and 18% of the Company’s sales in the second quarter of 2020 and 2019, respectively, decreased 18% in the second quarter of 2020 compared to the second quarter of 2019. MH sales for the first six months of 2020, representing 20% and 18% of the Company's sales for the 2020 and 2019 periods, decreased 6% in the first six months of 2020 compared to the prior year period. Based on industry data from the Manufactured Housing Institute, MH wholesale unit shipments decreased by approximately 14% in the second quarter of 2020 compared to the prior year quarter and decreased 1% for the first six months of 2020 compared to the prior year period. MH wholesale unit shipments were impacted due to temporary OEM plant shutdowns in the second quarter and first six months of ~~2019, respectively, pontoon sales decreasing 4% and 5%, respectively, fiberglass decreasing 3% and 4%, respectively, and ski and wake sales increasing 1% and 2%, respectively.~~2020 as well as COVID-19 related construction delays during these periods.

Adverse weather and flooding in certain regions of the country impacted marine retail shipments in the first half of 2019, particularly in the pontoon and aluminum fishing categories. Despite this impact, we believe there is long-term fundamental positive demand supported by consumer economic metrics, aging boats in service and the related replacement cycle. According to industry sources, the average age of boats in service is approximately 24 to 25 years compared to a 30-year estimated useful life, and approximately one million boats are expected to be retired over the next four years.

Indicators currently point towards a depletion in the final six months of 2019 of dealer inventory accumulation that was a result of the adverse weather in the first half of 2019. Factoring in the impact of weather in the first half of 2019, we expect an overall decline in powerboat retail unit shipments for 2019 of mid-single digits.

We anticipate that the marine market is poised to continue its recovery with the potential for a long runway of slow and steady growth as OEMs in this market continue to offer more value-added content and increased comfort and convenience on boats, consistent with the marine leisure lifestyle experience. Our marine portfolio companies are comprised of a high quality brand platform that is generating significant organic growth opportunities. The Company's combination of design, engineering, manufacturing and fabrication capabilities, along with its growing geographic footprint and comprehensive product offerings to its customers in the marine market, provides continuing opportunities for fully integrated solutions and additional content for the marine OEMs.

~~MH Industry~~

Sales to the MH industry, which represented 18% of the Company’s sales in the second quarter and first six months of 2019, increased 56% and 63% compared to the respective prior year periods. Based on industry data from the Manufactured Housing Institute and the Company's estimate for the month of June, MH wholesale unit shipments decreased by approximately 3% and 8% in the second quarter and first six months of 2019, respectively. Similar to the fourth quarter of 2018 and the first quarter of 2019, manufactured housing continues to be negatively impacted by wet weather conditions in certain regions of the country where moving inventory and setting foundations and houses have been difficult. Nevertheless, demographic trends within the MH market indicate strong expected demand patterns related to first time home buyers and those looking to downsize.

The Company believes it is well-positioned to capitalize on pent up demand and the significant upside potential of the MH market in the long-term, especially given the increasing attractiveness of the single-family manufactured housing option and the combination of its nationwide geographic footprint, available capacity in current MH concentrated locations, and current content per unit levels.

Factors that may favorably impact production levels further in this industry include improving quality credit standards in the residential housing market, new jobs growth, consumer confidence, favorable changes in financing regulations, a narrowing spread in interest rates on MH loans and mortgages on traditional residential "stick-built" housing and improvement in conditions in the asset-backed securities markets for manufactured housing loans.

Industrial Market

The industrial market is comprised primarily of the kitchen cabinet industry, hospitality market, retail and commercial fixtures market, office and household furniture market and regional distributors. Sales to this market represented ~~12%~~17% and ~~11%~~12% of our ~~consolidated~~ sales in the second quarter of 2020 and ~~first six months of~~ 2019, respectively, and decreased 3%2% in the second quarter of 2020 compared to the prior year quarter. Sales to the industrial market represented 15% and 11% of our sales for the first six months of 2020 and 2019, respectively, and increased 1%6% in the first six months of ~~2019~~2020 compared to the prior year ~~periods.~~

period. Overall, our revenues in these markets are focused on the residential housing, hospitality, high-rise housing and office, commercial construction and institutional furniture markets. Single family housing starts declined 6% in the second quarter of 2019, while multifamily residential starts increased 16% for the same period. Combined new housing starts decreased less than 1% in the second quarter of 2019 compared to the prior year quarter. For the first six months of 2019, single family housing starts decreased 5%, while multifamily housing starts decreased 1%, with combined housing starts decreasing 4%. Interest rate increases and tariffs in the past year have created some headwinds, but potential demand remains strong given the lack of affordable housing capacity and inventories. We believe these factors present opportunities for continued pent up demand along with improving consumer credit and strong jobs and wage growth. In addition, demographic trends related to new buyers and those looking to downsize are aligned well with our core housing and industrial market model.

~~The industrial market is primarily impacted by macroeconomic conditions and more specifically, conditions in the residential housing market.~~ We estimate that approximately 60% of our industrial business is directly tied to the residential housing market, with the remaining 40% directly tied to the non-residential and commercial markets. ~~The Company believes there is a direct correlation between the demand for its products~~

Combined new housing starts decreased 17% in the second quarter of 2020 compared to the prior year quarter, with single family housing starts decreasing 13% and multifamily residential starts decreasing 27%. For the first six months of 2020, combined new housing ~~market~~starts increased 1% compared to the prior year period, with single family housing starts decreasing 1% and multifamily residential starts increasing 5%. Our industrial products are generally among the last components installed in new ~~residential housing~~unit construction and ~~remodeling activities. Sales to the industrial market generally lag~~as such our related sales typically trail new ~~residential~~ housing starts by four to six months.

~~Fiscal Year 2019 Outlook~~

The 16 acquisitions we completed in 2017 and 2018 continue to present organic growth opportunities and synergies to further increase market share gains, expand geographically, establish best practices across all of our brands, and service our customers at the highest level. We continue to expect a return to a more normalized pattern of RV wholesale unit production in alignment with retail demand for the latter half of fiscal year 2019.

Based on its most recent forecast, the RVIA expects the percentage decline in RV wholesale unit shipments for fiscal 2019 to range from 11% to 18% compared to full year 2018, reflecting the continued recalibration of dealer inventory levels. On the retail side, the Company expects RV retail unit shipments to exhibit a mid-single digit percentage decline in 2019 with potential upside based on subsiding headwinds related to interest rates, tariffs, and commodity prices.

In the marine market, we anticipate that a retail unit decline in the powerboat sector of this market will be mid-single digits in 2019 mostly attributed to the effect of inclement weather, but believe there is overall positive momentum based on the increasing age of boats in service and continued positive demographics as OEMs position themselves for the expected strong 2020 model season.

On the MH side, we are currently forecasting low-to-mid single digit growth rates in wholesale unit shipments for 2019, and a low-single digit growth rate in new housing starts overall, and expect to continue to increase our content and market share in both of these market sectors beyond the general industry expectations as a result of increasing market penetration, strategic geographic expansions, and cross selling opportunities.

Our team remains focused on strategic acquisitions in our existing, similar or complementary businesses, expanding operations in targeted regional territories, capturing market share and increasing our per unit content, keeping costs aligned with revenue over the intermediate term, maximizing operating efficiencies, focusing on strategic capital expenditures to achieve cost reductions, labor efficiencies and increased capacity, talent management, engagement and retention, and the execution of our organizational strategic agenda.

In conjunction with our organizational strategic agenda, we plan to continue to make targeted capital investments to support new business and leverage our operating platform. The current capital plan for full year 2019 includes expenditures of approximately $30 million related primarily to strategic investments in geographic expansions, the strategic replacement and upgrading of production equipment to improve efficiencies and increase capacity, new process and product development, and other strategic capital and maintenance improvements.

REVIEW OF CONSOLIDATED OPERATING RESULTS

SecondQuarter and Six Months EndedJune ~~30, 2019~~28, 2020 Compared to ~~2018~~2019

The following table sets forth the percentage relationship to net sales of certain items on the Company’s Condensed Consolidated Statements of Income.


	Second Quarter Ended				Six Months Ended				Second Quarter Ended				Six Months Ended
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018		June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	81.6		81.0		82.1		81.6		82.6		81.6		81.9		82.1
Gross profit	18.4		19.0		17.9		18.4		17.4		18.4		18.1		17.9
Warehouse and delivery expenses	4.3		3.1		4.1		3.1
Selling, general and administrative expenses	5.4		5.6		5.8		5.7
Warehouse and delivery									4.8		4.3		4.4		4.1
Selling, general and administrative									7.4		5.4		6.7		5.8
Amortization of intangible assets	1.3		1.5		1.4		1.4		2.3		1.3		1.9		1.4
Operating income	7.4		8.8		6.6		8.2		2.9		7.4		5.1		6.6
Interest expense, net	1.4		1.0		1.4		0.9		2.6		1.4		2.1		1.4
Income taxes	1.5		2.0		1.2		1.7		0.1		1.5		0.8		1.2
Net income	4.5		5.8		4.0		5.6		0.2		4.5		2.2		4.0

Net Sales. Net sales in the second quarter of ~~2019 increased $8.3~~2020 decreased $189.2 million, or 1%31%, to ~~$613.2~~$424.0 million from ~~$604.9~~$613.2 million in the second quarter of ~~2018.~~2019. The ~~Company's~~consolidated net sales ~~increased in two of its primary markets~~decrease in the second quarter of ~~2019 with increases~~2020 was attributed to sales decreases in all four of ~~39% in marine and 56% in MH, partly offset by a decline of 3% in industrial and 14% in~~our end markets. The Company's RV market ~~sales.~~sales decreased 40%, marine market sales decreased 34%, industrial market sales decreased 2% and MH market sales decreased 18% when compared to the prior year quarter.

Net sales in the first six months of ~~2019 increased $64.7~~2020 decreased $208.1 million, or 6%17%, to ~~$1,221.4~~$1,013.3 million from ~~$1,156.7~~$1,221.4 million ~~in the prior year period. The Company's net sales increased in three of its primary markets~~ in the first six months of ~~2019 with increases of 64% in marine, 63% in MH and 1% in industrial, partly offset by a decline of 12% in RV market sales.~~

2019. The consolidated net sales ~~increase~~decrease in the first six months of 2020 was attributed to sales decreases in three of our end markets. The Company's RV market sales decreased 23%, marine market sales decreased 24% and MH market sales decreased 6% while industrial market sales increased 6% when compared to the prior year period.

During the second quarter and six months ended June 28, 2020, all four of ~~2019 primarily reflected revenue from nine acquisitions completed in fiscal year 2018. In addition~~our end markets were impacted by business disruptions and associated lost production and shipping days due to the ~~contributions of the 2018 acquisitions, increases in sales reflected increased penetration through geographic and product expansion efforts in the marine and MH markets.~~COVID-19 pandemic.

Revenue attributable to acquisitions completed in ~~first six months of 2018 was $65.0 million and $77.6 million for~~ the second quarter and first six months of ~~2018,~~2020 was $3.3 million and $3.8 million, respectively.

The Company’s RV content per wholesale unit (on a trailing twelve-month basis) for the second quarter of ~~2019 increased~~2020 decreased approximately ~~19%~~2% to ~~$3,135~~$3,086 from ~~$2,639~~$3,135 for the second quarter of ~~2018. The marine~~2019. Marine powerboat content per retail unit (on a trailing twelve-month basis) for the second quarter of ~~2019 increased~~2020 decreased approximately ~~93%~~13% to an estimated ~~$1,655~~$1,439 from ~~$856~~$1,659 for the second quarter of ~~2018.~~2019. MH content per wholesale unit (on a trailing twelve-month basis) for the second quarter of ~~2019~~2020 increased approximately ~~54%~~16% to an estimated ~~$3,884~~$4,501 from ~~$2,520~~$3,889 for the second quarter of ~~2018.~~2019.

Cost of Goods Sold. Cost of goods sold ~~increased $10.5~~decreased $150.3 million, or 2%30%, to ~~$500.6~~$350.3 million in the second quarter of ~~2019~~2020 from ~~$490.1~~$500.6 million in ~~2018.~~2019, primarily reflecting the decrease in net sales in the quarter. As a percentage of net sales, cost of goods sold increased during the second quarter of ~~2019~~2020 to 82.6% from 81.6% ~~from 81.0%~~ in ~~2018. For~~2019. This percentage increase is largely attributed to additional costs incurred and production inefficiencies related to business disruption of our end markets as a result of the COVID-19 pandemic.

Cost of goods sold decreased $172.1 million, or 17%, to $830.1 million in the first six months of ~~2019, cost of goods sold increased $58.1 million, or 6%, to $1,002.3 million~~2020 from ~~$944.2~~$1,002.2 million in ~~2018.~~2019, primarily reflecting the decrease in net sales in the period. As a percentage of net sales, cost of goods sold ~~increased~~decreased during the first six months of ~~2019~~2020 to 81.9% from 82.1% ~~from 81.6%~~ in ~~2018.~~2019.

Cost of goods sold as a percentage of net sales ~~was impacted during~~decreased in the ~~second quarter and~~ first six months of ~~2019 by:~~2020 primarily as a result of (i) ~~decreased RV revenue relative to overall fixed overhead costs; (ii) the lower margin profile of LaSalle Bristol ("LaSalle"), which was acquired~~cost reductions we initiated in the ~~fourth~~third quarter of ~~2018~~2019, (ii) synergies achieved and ~~(iii) inventory sold~~realized in the ~~second quarter and~~ first six months of 2020 from our 2018 and 2019 ~~which reflected higher operating overhead~~acquisitions and ~~input costs incurred~~(iii) decreases in ~~the latter part of 2018 relative to the current~~

~~commodities market. Part of the increase~~commodity cost inputs. These decreases in ~~the~~ cost of goods sold ~~percentage was~~were partially offset by ~~leveraging fixed~~additional costs ~~in the marine~~incurred and ~~industrial sectors and by the Company's acquisitions over the last 18~~production inefficiencies related to 24 months that have a higher margin profile. In general, the Company's cost of goods sold percentage can be impacted from quarter-to-quarter 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 the productionbusiness disruption of our ~~products. The timing~~end markets as a result of the ~~Company's pass through of input cost increases and decreases to its customers may not coincide with the period in which such costs are incurred in inventory.~~COVID-19 pandemic.

Gross Profit. Gross profit decreased ~~$2.1~~$39.0 million, or 2%35%, to ~~$112.7~~$73.7 million in the second quarter of ~~2019~~2020 from ~~$114.8~~$112.7 million in ~~2018. For the first six months of 2019, gross profit increased $6.7 million, or 3% to $219.2 million from $212.5 million in 2018.~~2019. As a percentage of net sales, gross profit decreased to ~~18.4%~~17.4% in the second quarter of ~~2019 from 19.0% in the same period in 2018 and decreased to 17.9% for the first six months of 2019~~2020 from 18.4% in the same period in ~~2018.~~ 2019. Gross profit decreased $36.0 million, or 16%, to $183.2 million in the first six months of 2020 from $219.2 million in 2019. As a percentage of net sales, gross profit increased to 18.1% in the first six months of 2020 from 17.9% in the same period in 2019.

The changes in gross profit as a percentage of net sales in the second quarter and first six months of ~~2019~~2020 compared to the same periods in ~~2018~~2019 reflect the impact of the factors discussed above under “Cost of Goods Sold”.

Economic or industry-wide factors affecting the profitability of our RV, MH, marine and industrial businesses include the costs of commodities and the labor used to manufacture our products as well as the competitive environment that can cause gross margins to fluctuate from quarter-to-quarter and year-to-year. Material and labor costs are the primary factors determining our cost of products sold, and any future increases in raw material or labor costs would impact our profit margins negatively if we were unable to raise the selling prices to our customers for our products by corresponding amounts. Historically, we have generally been able to pass along cost increases to customers.

Warehouse and Delivery Expenses. Warehouse and delivery expenses ~~increased $7.6~~decreased $6.1 million, or ~~40%~~23%, to $20.2 million in the second quarter of 2020 from $26.3 million in the second quarter of ~~2019 from $18.7 million in 2018. For the first six months in 2019, warehouse and delivery expenses increased $14.5 million, or 41%, to $50.3 million from $35.8 million in 2018.~~2019. As a percentage of net sales, warehouse and delivery expenses were 4.8% in the second quarter of 2020 compared to 4.3% in the second quarter of ~~2019 compared~~2019. Warehouse and delivery expenses decreased $5.4 million, or 11%, to ~~3.1% in the second quarter of 2018 and 4.1%~~$44.9 million in the first six months of ~~2019 compared to 3.1%~~2020 from $50.3 million in the first six months of ~~2018. The expense increase~~2019. As a percentage of net sales, warehouse and delivery expenses were 4.4% in the ~~second quarter and~~ first six months of ~~2019~~2020 compared to 4.1% in the ~~prior year periods was primarily attributable to increased sales volumes and to the impact of certain acquisitions completed~~same period in ~~2018 that had higher~~2019.

The increase in warehouse and delivery expenses as a percentage of net sales ~~when compared to the consolidated percentage. In addition, the Company's shipments to the OEMs in~~for the second quarter and first six months of ~~2019 were generally lower volume~~2020 primarily reflects the fixed nature of certain of these expenses and ~~higher frequency, and~~operating inefficiencies as ~~a result transportation costs relative to~~net sales ~~levels of products delivered increased as a percentage of net sales.~~declined.

Selling, General and Administrative ~~(SG&A)~~("SG&A") Expenses. SG&A expenses decreased ~~$1.0~~$1.3 million, or 3%4%, to ~~$32.9~~$31.6 million in the second quarter of ~~2019~~2020 from ~~$33.9~~$32.9 million in ~~2018. For~~ the ~~first six months of 2019, SG&A expenses increased $4.9 million, or 7%, to $70.6 million from $65.7 million in 2018.~~prior year quarter. As a percentage of net sales, SG&A expenses were 7.4% in the second quarter of 2020 compared to 5.4% in the second quarter of ~~2019 compared~~2019.

SG&A expenses decreased $3.1 million, or 4%, to ~~5.6% in the second quarter of 2018 and 5.8%~~$67.5 million in the first six months of ~~2019~~2020 from $70.6 million in the prior year period. As a percentage of net sales, SG&A expenses were 6.7% in the first six months of 2020 compared to ~~5.7%~~5.8% in ~~2018.~~the prior year period.

The decrease in SG&A expenses in the second quarter of ~~2019~~2020 compared to ~~2018~~2019 is primarily due to ~~a decrease~~the realization of cost reduction measures implemented in ~~incentive compensation~~the third quarter of 2019 and ~~sales commissions~~the first quarter of 2020 as well as areductions in certain SG&A spending associated with the decrease in ~~professional service fees. SG&A expense~~net sales in the second quarter and first six months of ~~2019 also reflected these two factors, which were offset by: (i) the impact of additional headcount and administrative expenses associated with recent acquisitions; (ii) the additional investment~~2020. The increase in and costs related to an expansion of certain leadership roles to support our continued strategic growth plans in 2019 and beyond; (iii) the impact of certain acquisitions completed in 2018 that had higher SG&A expenses as a percentage of net sales ~~when compared to the consolidated percentage and (iv) the Company's decision to maintain a higher operating cost structure compared to revenues through~~in the second quarter and first six months of ~~2019~~2020 compared to prior year periods is attributed to the decline in ~~anticipation~~net sales from the impact of ~~expected improving retail demand in all four of our primary markets.~~COVID-19, discussed above.

Amortization of Intangible Assets. Amortization of intangible assets ~~decreased $0.9~~increased $1.5 million, or ~~10%~~18%, to $9.8 million in the second quarter of ~~2019 compared to~~2020 from $8.3 million in the prior year quarter and increased ~~$1.0~~$2.1 million, or 6%12%, to $19.4 million in the first six months of ~~2019~~2020 from $17.3 million in the prior year period. The increase in the second quarter and first six months of 2020 compared to the prior year period. The decrease in the second quarter of 2019 compared to the prior year period was primarily the result of final purchase accounting adjustments to intangible assets and the impact to associated amortization expense in the second quarter of 2019. The increase in amortization expense in the first six months of 2019 compared to the prior year periodperiods primarily reflects the impact of businesses acquired in ~~2018, partly offset by the purchase accounting adjustments discussed above.~~2019 and 2020.

Operating Income. Operating income decreased ~~$7.9~~$33.1 million, or ~~15%~~73%, to ~~$45.2~~$12.1 million in the second quarter of ~~2019~~2020 from ~~$53.1~~$45.2 million in ~~2018. For the first six months of 2019, operating income decreased $13.7 million, or 15%, to $81.1 million from $94.8 million in the prior year period.~~2019. As a percentage of net sales, operating income was ~~7.4%~~2.9% in the second quarter of ~~2019~~2020 versus ~~8.8%~~7.4% in the same period in ~~2018 and 6.6% for the first six months of 2019 versus 8.2% in the prior year period.~~2019. Operating income ~~in the second quarter and the first six months of 2018 included $7.2~~decreased $29.7 million, ~~and $8.5~~or 37%, to $51.4 million ~~respectively, attributable to acquisitions completed~~ in the first six months of ~~2018.~~2020 from $81.1 million in 2019. As a percentage of net sales, operating income was 5.1% in the first six months of 2020 versus 6.6% in the same period in 2019. The change in operating income and operating ~~margin~~income percentage is primarily attributable to the items discussed above.

Interest Expense, Net. Interest expense increased ~~$2.3~~$2.2 million, or ~~38%~~25%, to ~~$8.6~~$10.8 million in the second quarter of ~~2019~~2020 from ~~$6.3~~$8.6 million in the prior year. For the first six months of ~~2019,~~2020, interest expense increased ~~$7.0~~$3.7 million, or ~~66%~~21%, to ~~$17.6~~$21.3 million from ~~$10.6~~$17.6 million in the prior year period.

The increase in interest expense ~~reflects: (i) increased borrowings related to 2018 acquisitions and (ii) increases in the average interest rate on the variable rate portion of the Company's debt, which reflects increases in LIBOR~~ in the second quarter and first six months of 2020 reflects increased borrowings related to 2019 ~~compared to~~and 2020 acquisitions and an increase in the ~~prior year periods.~~Company's overall average interest rate resulting from the issuance of $300 million aggregate principal amount of 7.5% senior notes in the third quarter of 2019.

Income Taxes. Income tax expense decreased ~~$2.7~~$8.6 million, or ~~23%~~94%, to ~~$9.2~~$0.6 million in the second quarter of 2020 from ~~$11.9~~$9.2 million in the prior year period. For the first six months of ~~2019,~~2020, income tax expense decreased ~~$4.0~~$7.0 million, or ~~21%~~46%, to ~~$15.2~~$8.2 million for the first six months of 2020 from ~~$19.2~~$15.2 million in the prior year period. ~~For~~The decrease in both the second quarter and first six months of 2020 is attributed to the decrease in taxable income for both periods.

The effective tax rate in the second quarter of 2020 and 2019 was 44.4% and 25.1%, respectively, and the effective tax rate ~~was 25.1% compared to 25.5% in~~for the comparable ~~2018 period. For~~six month periods was 27.2% and 23.9%, respectively. The effective tax rate for the second quarter and six months of 2020 reflects the impact of $2.2 million of permanent tax differences due to certain Coronavirus Aid, Relief, and Economic Security Act payroll tax credits. In addition, the effective tax rate for the first six months of 2019 ~~the effective tax rate was 23.9% compared to 22.9% for the prior year period. The effective tax rate for the periods presented~~ includes the impact of the recognition of excess tax benefits on share-based compensation that ~~were~~was recorded as a reduction to income tax expense upon ~~realization. Amounts recorded include $0.1 million~~realization in the ~~second quarter~~amount of ~~2019 and $0.1 million in the second quarter of 2018 and~~ $0.9 million and $2.2 million for the comparable six month 2019 and 2018 periods, respectively. We anticipate our full year 2019 effective tax rate to be between 24% and 25%. Excluding the impact relating to the share-based payment awards and excluding the impact of one-time tax items, we anticipate our full year 2019 effective tax rate to be between 25% and 26%, which is a non-GAAP metric. The 1% difference between the GAAP and non-GAAP effective tax rate is mostly attributable to the impact of share-based payment awards.million.

The Company's combined effective income tax rate from period to period and for the full year 2019 could further fluctuate due to: (i) refinements in federal and state income tax estimates, which are impacted by the availability of tax credits; (ii) permanent differences impacting the effective tax rate; (iii) shifts in apportionment factors among states as a result of recent acquisition activity and other factors and (iv) the timing of the recognition of excess tax benefits related to the vesting of share-based payments awards as previously discussed.

~~Net Income.~~ Net income for the second quarter of 2019 was $27.4 million, or $1.18 per diluted share, compared to $34.9 million, or $1.42 per diluted share for 2018. For the first six months of 2019, net income was $48.3 million, or $2.07 per diluted share, compared to $64.9 million, or $2.62 per diluted share. The changes in net income for the second quarter and first six months of 2019 compared to prior year periods reflect the impact of the items previously discussed.

Use of Financial Metrics

Our MD&A includes financial metrics, such as RV, marine and MH content per unit, which we believe are important measures of the Company's business performance. Content per unit metrics are generally calculated using our market sales divided by third-party measures of industry volume. These metrics should not be considered alternatives to U.S. GAAP. Our computations of content per unit may differ from similarly titled measures used by others. ~~You~~These metrics should not ~~consider these metrics~~be considered in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP.

REVIEW BY BUSINESS SEGMENT

The ~~Company has determined that its~~Company's reportable segments, Manufacturing and Distribution, are ~~those~~ based on its method of internal ~~reporting, which segregates its businesses by product category and production/distribution process.~~

~~The Company’s reportable business segments are as follows:~~

~~Manufacturing~~ – This segment includes the following: laminated products that are utilized to produce furniture, shelving, walls, countertops, and cabinet products, cabinet doors, fiberglass bath fixtures and tile systems, hardwood furniture, vinyl printing, decorative vinyl and paper laminated panels, solid surface, granite, and quartz countertop fabrication, RV painting, fabricated aluminum products, fiberglass and plastic components, softwoods lumber, custom cabinetry, polymer-based flooring, electrical systems components including instrument and dash panels, wrapped vinyl, paper and hardwood

profile mouldings, interior passage doors, air handling products, slide-out trim and fascia, thermoformed shower surrounds, specialty bath and closet building products, fiberglass and plastic helm systems and components products, wiring and wire harnesses, boat covers, towers, tops and frames, aluminum fuel tanks, CNC molds and composite parts, slotwall panels and components and other products.

~~Distribution~~ –reporting. The Company ~~distributes pre-finished wall~~regularly evaluates the performance of the Manufacturing and ~~ceiling panels, drywall~~Distribution segments and ~~drywall finishing products, electronics~~allocates resources to them based on a variety of indicators including sales and ~~audio systems components, appliances, wiring, electrical~~operating income. The Company does not measure profitability at the customer market (RV, marine, MH and plumbing products, fiber reinforced polyester products, cement siding, raw and processed lumber, interior passage doors, roofing products, laminate and ceramic flooring, tile, shower doors, furniture, fireplaces and surrounds, interior and exterior lighting products, and other miscellaneous products, in addition to providing transportation and logistics services.industrial) level.

SecondQuarter and Six Months EndedJune ~~30, 2019~~28, 2020 Compared to ~~2018~~2019

General

In the discussion that follows, sales attributable to the Company’s ~~operating~~reportable segments include intersegment sales and gross profit includes the impact of intersegment operating activity.

The table below presents information about the sales, gross profit and operating income of the Company’s ~~operating~~reportable segments. A reconciliation of consolidated operating income is presented in Note 15 toof the Notes to Condensed Consolidated Financial Statements.


	Second Quarter Ended				Six Months Ended				Second Quarter Ended				Six Months Ended
(thousands)	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018		June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
Sales
Manufacturing	$	442,606	$	472,874	$	876,010	$	918,156	$	297,688	$	442,606	$	724,527	$	876,010
Distribution	180,061		142,992		363,760		259,580		132,556		180,061		303,822		363,760
Gross Profit
Manufacturing	80,700		95,222		157,527		176,809		48,957		80,700		127,904		157,527
Distribution	30,800		23,820		59,773		41,694		23,192		30,800		52,388		59,773
Operating Income
Manufacturing	48,787		64,989		93,224		117,912		22,410		48,787		68,114		93,224
Distribution	10,800		10,196		19,091		17,486		6,938		10,800		16,906		19,091

Manufacturing

Sales. Sales decreased ~~$30.3~~$144.9 million, or 6%33%, to ~~$442.6~~$297.7 million in the second quarter of ~~2019~~2020 from ~~$472.9~~$442.6 million in ~~2018.~~the prior year quarter. For the first six months of ~~2019,~~2020, sales decreased ~~$42.2~~$151.5 million, or 5%17%, to ~~$876.0~~$724.5 million from ~~$918.2~~$876.0 million in the prior year period. This segment accounted for approximately ~~71%~~69% and ~~70%~~71% of the Company’s consolidated net sales for the second quarter of 2020 and 2019, respectively, and 70% of the Company's consolidated net sales for the first six months of ~~2019~~2020 and ~~77% and 78% for the second quarter and first six months of 2018.~~2019. The sales decrease in the second quarter and first six months of ~~2019 largely reflected~~2020 was primarily attributed to sales decreases in our primary end markets as a ~~decrease in wholesale unit shipments in~~result of business disruptions and lost production and shipping days due to the ~~RV and MH industries and in retail shipments in the marine industry.~~COVID-19 pandemic.

~~Revenue in the second quarter and first six months of 2018 included $36.9 million and $47.2 related to acquisitions completed in the first six months of 2018.~~

Gross Profit. Gross profit decreased ~~$14.5~~$31.7 million, or ~~15%~~39%, to $49.0 million in the second quarter of 2020 from $80.7 million in the second quarter of ~~2019 from $95.2 million in the second quarter of 2018.~~2019. For the first six months of ~~2019,~~2020, gross profit decreased ~~$19.3~~$29.6 million, or ~~11%~~19%, to $127.9 million from $157.5 million ~~from $176.8 million~~ in ~~2018.~~2019. As a percentage of sales, gross profit decreased to 16.5% in the second quarter of 2020 from 18.2% in the second quarter of 2019 ~~from 20.1% in 2018~~ and decreased to ~~18.0%~~17.7% in the first six months of ~~2019~~2020 from ~~19.3%~~18.0% in ~~2018.~~

the prior year period. Gross profit as a percentage of net sales decreased during the second quarter and first six months of ~~2019~~2020 compared to the prior year periods primarily due ~~to: (i) decreased revenue relative~~ to ~~overall fixed overhead~~additional costs and ~~(ii) inventory sold in~~operational inefficiencies as a result of business disruptions from the ~~second quarter of 2019 which reflected higher input costs incurred in the latter part of 2018 relative to the current commodities market.~~COVID-19 pandemic.

Operating Income. Operating income decreased ~~$16.2~~$26.4 million, or ~~25%~~54%, to ~~$48.8~~$22.4 million in the second quarter of ~~2019~~2020 from ~~$65.0~~$48.8 million in the prior ~~year.~~year quarter. For the first six months of ~~2019,~~2020, operating income decreased ~~$24.7~~$25.1 million, or ~~21%~~27%, to $68.1 million from $93.2 million ~~from $117.9 million~~ in ~~2018.~~the prior year. The overall decrease in operating income in the second quarter and first six months of ~~2019~~2020 primarily reflects the items discussed above.

~~Operating income in the second quarter and first six months of 2018 included $4.7 million and $5.9 million, respectively, attributable to acquisitions completed in the first six months of 2018.~~

Distribution

Sales. Sales ~~increased $37.1~~decreased $47.5 million, or 26%, to ~~$180.1~~$132.6 million in the second quarter of ~~2019~~2020 from ~~$143.0~~$180.1 million in ~~2018.~~the prior year quarter. For the first six months of ~~2019,~~2020, sales ~~increased $104.2~~decreased $60.0 million, or ~~40%~~16%, to $303.8 million from $363.8 million ~~from $259.6 million~~ in ~~2018.~~the prior year period. This segment accounted for approximately ~~29%~~31% and ~~30%, respectively,~~29% of the Company’s consolidated net sales for the second quarter of 2020 and 2019, respectively, and 30% of consolidated net sales for the first six months of ~~2019,~~2020 and ~~23% and 22% for the second quarter and first six months of 2018.~~2019. The sales increase in the second quarter and six months of 2019 compared to the prior year periods was largely attributed to the revenue contribution of LaSalle, which was acquired during the fourth quarter of 2018. Revenuedecrease in the second quarter and first six months of ~~2018 included $28.1 million~~2020 was primarily attributed to sales decreases in our primary end markets as a result of business disruptions and ~~$30.4 million, respectively, related~~lost production and shipping days due to ~~acquisitions completed in~~ the ~~first six months of 2018.~~COVID-19 pandemic.

Gross Profit. Gross profit ~~increased $7.0~~decreased $7.6 million, or ~~29%~~25%, to $23.2 million in the second quarter of 2020 from $30.8 million in the second quarter of ~~2019 from $23.8 million in the second quarter of 2018.~~2019. For the first six months of ~~2019,~~2020, gross profit ~~increased $18.1~~decreased $7.4 million, or ~~43%~~12%, to $52.4 million from $59.8 million ~~from $41.7 million~~ in ~~2018.~~2019. As a percentage of sales, gross profit increased to 17.5% in the second quarter of 2020 from 17.1% in the second quarter of 2019 ~~from 16.7% in the second quarter of 2018~~ and increased to ~~16.4% for~~17.2% in the first six months of ~~2019~~2020 from ~~16.1% for~~16.4% in the prior year period.

As a percentage of sales, gross profit increased during the second quarter and first six months of 2020 compared to the prior year periods primarily due to realized synergies from certain 2018 ~~primarily reflecting~~and 2019 acquisitions, partially offset by additional costs and operational inefficiencies as a result of business disruptions from the ~~impact of acquisitions completed during 2018 which had higher margin product lines.~~COVID-19 pandemic.

Operating Income. Operating income ~~increased $0.6~~decreased $3.9 million, or 6%36%, to ~~$10.8~~$6.9 million in the second quarter of ~~2019~~2020 from ~~$10.2~~$10.8 million in the prior ~~year.~~year quarter. For the first six months of ~~2019,~~2020, operating income ~~increased $1.6~~decreased $2.2 million, or 9%11%, to $16.9 million from $19.1 million ~~from $17.5 million for the first six months of 2018. Operating income~~ in the ~~second quarter and first six months of 2018 included $2.5 million and $2.6 million, respectively, related to distribution acquisitions completed in the first six months of 2018.~~prior year. The overall ~~net improvement~~decrease in operating income in the second quarter and first six months of ~~2019~~2020 primarily reflects the items discussed above.

~~Unallocated Corporate Expenses~~LIQUIDITY AND CAPITAL RESOURCES

~~Unallocated corporate expenses~~

As the impact of the COVID-19 pandemic on the economy, our markets and our operations evolves, we will continue to assess our liquidity needs. After a postponement of non-essential capital expenditures in the second quarter of ~~2019 decreased $6.9 million~~2020, the Company expects to ~~$6.1 million from $13.0 million~~return to its historical levels of capital expenditures in the ~~prior year period,~~second half of 2020 reflecting the anticipated recovery of our end markets.

Our liquidity at June 28, 2020 consisted of cash and ~~for the first six months~~cash equivalents of ~~2019 decreased $10.3~~$111.1 million ~~to $14.0~~and $410.2 million ~~from $24.3 in 2018. The decrease in unallocated corporate expenses in both the second quarter and first six months~~ of ~~2019 compared to the second quarter and first six months of 2018 was largely attributable to a decrease in incentive compensation as well as a decrease in professional costs.~~unused borrowing availability under our credit facility.

~~LIQUIDITY AND CAPITAL RESOURCES~~

Cash Flows

Operating Activities

Cash flows from operating activities are one of the Company's primary sources of liquidity, representing the net income the Company earned in the reported periods, adjusted for non-cash items and changes in operating assets and liabilities.

Net cash provided by operating activities ~~increased $2.6~~decreased $54.4 million to $39.4 million in the first six months of 2020 from $93.8 million in the first six months of 2019 ~~from $91.2 million in the first six months of 2018~~ primarily due ~~to:~~to (i) ~~an increase in depreciation and amortization of $4.8 million; (ii)~~

~~an increase in non-cash interest expense from the amortization of convertible notes debt discount of $0.5 million; (iii) an increase in stock-based compensation expense of $0.8 million; (iv)~~ a decrease of net income of $26.4 million due to disruptions in ~~use~~our end markets as a result of ~~cash from other operating cash flows of $1.1 million and (vi) a decrease~~the COVID-19 pandemic; (ii) an increase in the use of cash from ~~changes~~trade receivables of $24.0 million, primarily due to the timing of customer cash payments at the end of our fiscal second quarter; (iii) an increase in the use of cash from inventories of $20.8 million, due mostly to purchases of inventory in June 2020 as a result of an increase in demand in our end markets; and (iv) a decrease of deferred income tax liabilities of $7.6 million. These decreases in operating ~~assets and liabilities, net of acquisitions of businesses of $12.1 million,~~cash flows were partially offset by ~~a decrease in net income~~an increase of ~~$16.7~~cash flows from prepaid expenses and other assets of $12.5 million and accounts payable of $5.2 million and an increase of depreciation and amortization of $4.4 million.

Investing Activities

Net cash used in investing activities ~~decreased $263.4~~increased $19.9 million to $35.0 million in the first six months of 2020 from $15.1 million in the first six months of 2019 ~~from $278.4 million in the first six months of 2018~~ primarily due ~~to: (i) a decrease~~to an increase in cash used in business acquisitions of ~~$263.2~~$22.6 million

and ~~(ii) an increase~~a decrease in proceeds from ~~the~~ sale of property, plant, and equipment and other investing activities of ~~$4.3~~$4.2 million, partially offset by ~~an increase~~a decrease in capital expenditures of ~~$4.1~~$6.9 million.

The Company's current operating model forecasts capital expenditures for fiscal 2019 of approximately $30 million related primarily to strategic investments in geographic expansions, the strategic replacement and upgrading of production equipment to improve efficiencies and increase capacity, new process and product development, and other strategic capital and maintenance improvements.

Financing Activities

Cash flows from financing activities are one of the Company's primary sources of liquidity through borrowings, effective June 5, 2018 under a credit facility (the "2018 Credit Facility") consisting of a revolving credit loan (the "2018 Revolver") and a term loan (the "2018 Term Loan").

Net cash flows used by financing activities ~~increased $246.6~~decreased $29.4 million to $32.7 million in first six months of 2020 from $62.1 million in the first six months of 2019 ~~from a source of cash of $184.5 million in the first six months of 2018~~ primarily due ~~to: (i) gross proceeds~~to a net decrease in repayments on our revolving credit facility and term loan of ~~$172.5~~$52.8 million ~~from the second quarter 2018 issuance~~and other financing activities of ~~1% Convertible Senior Notes due 2023 (the "Convertible Notes")~~$3.8 million, partially offset by stock repurchases under our buyback program of $15.6 million with no ~~comparable~~corresponding amount in the ~~first six months~~prior year period and cash dividends paid to shareholders of ~~2019; (ii) a source of cash in the first six months of 2018 of $18.1~~$11.6 million ~~from the related sale of warrants~~ with no ~~comparable~~corresponding amount in the first six months of 2019; (iii) an increase in use of cash from net repayments under the 2018 Credit Facility of $143.5 million; (iv) a use of cash of $4.4 million in the first six months of 2019 from payment of contingent consideration from a business acquisition with no comparable amount in the first six months of 2018 and (v) an increase in cash used for the vesting of stock-based awards, net of shares tendered for taxes of $0.7 million. Partially offsetting these items were: (i) a use of cash in the first six months of 2018 of $31.5 million from the purchase of Convertible Notes hedges with no comparable amount in the first six months of 2019; (ii) a use of cash from stock repurchases under stock buyback program of $54.1 million in the first six months of 2018 with no comparable amount in the first six months of 2019 and (iii) a decrease in the use of cash for deferred financing payments of $7.0 million.

See Notes 9, 10, 14 and 16 of the Notes to Condensed Consolidated Financial Statements for further information on the Company's indebtedness, derivative financial instruments, income taxes, and stock repurchases, respectively.prior year period.

Summary of Liquidity and Capital Resources

The Company's existing cash and cash equivalents, cash generated from operations, and available borrowings under its ~~2018 Credit Facility~~credit facility are expected to be sufficient to meet anticipated cash needs for working capital and capital expenditures for at least the next 12 months, exclusive of any acquisitions, based on its current cash flow budgets and forecast of short-term and long-term liquidity needs.

The Company's credit facility consists of a $550 million senior secured revolver and a $100 million senior secured term loan. The maturity date for borrowings under the credit agreement that established the credit facility is September 17, 2024. Upon the satisfaction of certain conditions, and obtaining incremental commitments from its lenders, the Company may be able to increase the borrowing capacity of the credit facility by up to $250 million. Borrowings under the credit facility are secured by substantially all personal property assets of the Company and any domestic subsidiary guarantors. Pursuant to the credit agreement:

The term loan is due in consecutive quarterly installments in the following amounts: (i) through and including June 30, 2021, $1,250,000 and (ii) beginning September 30, 2021, and each quarter thereafter, $2,500,000, with the remaining balance due at maturity;

The interest rates for borrowings under the revolver and the term loan are the Prime Rate or LIBOR

plus a margin, which ranges from 0.00% to 0.75% for Prime Rate loans and from 1.00% to 1.75% for LIBOR

loans depending on the Company’s consolidated total leverage ratio. The Company is required to pay fees on unused but committed portions of the revolver, which range from 0.15% to 0.225%.

At June 28, 2020, the Company had $410.2 million of unused borrowing availability under its credit facility. The ability to access unused borrowing capacity under the ~~2018 Credit Facility~~credit facility as a source of liquidity is dependent on maintaining compliance with the financial covenants as specified under the terms of the credit ~~agreement that established the 2018 Credit Facility (the "2018 Credit Agreement").~~agreement.

As of and for the June ~~30, 2019~~28, 2020 reporting date, the Company was in compliance with its financial ~~debt~~ covenants as required under the terms of ~~the 2018 Credit Agreement.~~its credit agreement. The required maximum consolidated total leverage ratio and the required minimum consolidated fixed charge coverage ratio, as such ratios are defined in the credit agreement, compared to the actual amounts as of June ~~30, 2019~~28, 2020 and for the fiscal period then ended are as follows:

Required

Actual
Consolidated total leverage ratio (12-month period)
3.00

2.46
Consolidated fixed charge coverage ratio (12-month period)
1.50

3.18

Working capital requirements vary from period to period depending on manufacturing volumes, ~~primarily related to the RV, MH and marine industries as well as the industrial markets we serve,~~ the timing of deliveries, and the payment cycles of customers. In the event that operating cash flow is inadequate and one or more of the Company's capital resources were to become unavailable, 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.

Borrowings under the 2018 Revolver and the 2018 Term Loan, which are subject to variable rates of interest, are subject to a maximum total borrowing limit of $900.0 million (effective June 5, 2018). See Note 10 of the Notes to Condensed Consolidated Financial Statements for information on interest rate swaps used to partially hedge variable interest rates under the 2018 Revolver and 2018 Term Loan. The unused availability under the 2018 Credit Facility as of June 30, 2019 was $477.7 million.

CRITICAL ACCOUNTING POLICIES

There have been no ~~other~~ material changes to our ~~significant~~critical accounting policies which are summarized in the MD&A ~~and Notes to the Consolidated Financial Statements~~ in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

OTHER

Seasonality

~~Manufacturing operations~~Operations in the RV, marine and MH industries historically have been seasonal and at their highest levels when the weather is moderate. Accordingly, the Company’s sales and profits had generally been the highest in the second quarter and lowest in the fourth quarter. Seasonal industry trends in the past several years have included the impact related to the addition of major RV manufacturer open houses for dealers in the August/September timeframe as well as marine open houses in the January/February timeframe, resulting in dealers delaying certain restocking purchases until new product lines are introduced at these shows. In addition, current and future seasonal industry trends may be different than in prior years due to the impact of national and regional economic conditions and consumer confidence on retail sales of RVs and other products for which the Company sells its components, timing of dealer orders, fluctuations in dealer inventories, and from time to time, the impact of severe weather conditions on the timing of industry-wide wholesale shipments.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

The Company makes forward-looking statements with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities for existing products, plans and objectives of management, markets for the common stock of Patrick Industries, Inc. and other matters from time to time and desires to take advantage of the “safe harbor” which is afforded such statements under the Private Securities Litigation Reform Act of 1995 when they are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statements. The statements contained in the foregoing “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as well as other statements contained in ~~the~~this quarterly report and statements contained in future filings with the Securities and Exchange Commission (“SEC”), publicly disseminated press releases, quarterly earnings conference calls, and statements which may be made from time to time in the future by management of the Company in presentations to shareholders, prospective investors, and others interested in the business and financial affairs of the Company, which are not historical facts, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. Any projections of financial performance or statements concerning expectations as to future developments should not be construed in any manner as a guarantee that such results or developments will, in fact, occur. There can be no assurance that any forward-looking statement will be realized or that

actual results will not be significantly different from that set forth in such forward-looking statement. ~~The Company does not undertake~~Information about certain risks that could affect our business and cause actual results to ~~publicly update~~differ from those expressed or ~~revise any~~implied in the forward-looking statements ~~except as required by law. Factors that may affect the Company’s operations and prospects~~ are contained in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, and in the Company's Form 10-Qs for subsequent quarterly periods, which are filed with the SEC and are available on the SEC’s website at www.sec.gov.



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Debt Obligations under Credit Agreement

At June ~~30, 2019,~~28, 2020, our total debt obligations under our ~~2018 Credit Agreement~~credit agreement were under LIBOR-based interest rates. A ~~100 basis~~100-basis point increase in the underlying LIBOR and prime rates would result in additional annual interest cost of approximately ~~$2.3~~$0.3 million, assuming average borrowings, including ~~the 2018 Term Loan,~~our term loan, subject to variable rates of ~~$234.5~~$31.3 million, which was the amount of such borrowings outstanding at June ~~30, 2019~~28, 2020 subject to variable rates. The ~~$234.5~~$31.3 million excludes deferred financing costs related to the ~~2018 Term Loan~~term loan and $200.0 million of borrowings outstanding under the ~~2018 Credit Facility~~revolver and term loan that are hedged at a fixed interest rate through interest rate swaps.

~~Inflation~~ Commodity Price Volatility

The prices of key raw materials, consisting primarily of lauan, gypsum, particleboard, aluminum, softwoods lumber, and petroleum-based products are influenced by demand and other factors specific to these commodities, such as the price of oil, rather than being directly affected by inflationary pressures. Prices of certain commodities have historically been

volatile and continued to fluctuate in the second quarter and first six months of ~~2019.~~2020. During periods of ~~rising~~volatile commodity prices, we have generally been able to pass ~~the increased costs~~both price increases and decreases to our customers in the form of ~~surcharges and~~ price ~~increases. However,~~adjustments. We are exposed to risks during periods of commodity volatility because there can be no assurance future 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.~~increases or decreases. We do not believe that ~~inflation~~commodity price volatility had a material effect on results of operations for the periods presented.



ITEM 4.	CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains “disclosure controls and procedures”, as such term is defined under Securities Exchange Act Rule 13a-15(e), that are designed to ensure that information 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 information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and the Company’s management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including consolidated subsidiaries, 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 the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the second quarter ended June ~~30, 2019 or subsequent to the date the Company completed its evaluation,~~28, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Items 1, 3, 4 and 5 of Part II are not applicable and have been omitted.



ITEM 1A.	RISK FACTORS

~~There have been no material changes to~~“Item 1A. Risk Factors” of our Form 10-K includes a discussion of our risk factors. The information presented below updates, and should be read in conjunction with, the risk factors ~~previously~~and information disclosed in our ~~Annual Report on~~ Form 10-K for the year ended December 31, ~~2018.~~2019. Except as presented below, there have been no material changes from the risk factors described in our Form 10-K for the year ended December 31, 2019.

The global spread of the COVID-19 virus and measures implemented to combat it have had, and are expected in the future to continue to have, a material adverse effect on our business.

The global spread of the novel coronavirus (COVID-19) in recent months has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption in financial markets. The impact of this pandemic has created significant uncertainty in the global economy and has had, and is expected to continue to have, a material adverse effect on our business, employees, suppliers, and customers. The duration and the magnitude of the impact of the COVID-19 pandemic cannot be precisely estimated at this time, as they are affected by a number of factors, many of which are outside of our control. As a result of the COVID-19 pandemic and potential future pandemic outbreaks, we face significant risks including, but not limited to:

Decreases in consumer confidence and disposable income and increases in unemployment could reduce demand for our products by our customers in all of our end markets.

Tightening credit standards could negatively impact credit availability to consumers which could have an adverse effect on all of our end markets.

Supply chain and shipping interruptions and constraints, volatility in demand for our products caused by sudden and significant changes in production levels by our customers or other restrictions affecting our business could adversely impact our planning and forecasting, our revenues and our operations.

Disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing and supply elements such as raw materials or other finished product components, transportation, workforce, or other manufacturing and distribution capabilities could result in our inability to meet our end market customer needs and achieve cost targets.

Significant changes in the conditions in markets in which we manufacture, sell or distribute our products, including additional or expanded quarantines or "stay at home" orders, governmental or regulatory actions, closures or other restrictions that further limit or close our operating and manufacturing facilities, restrict our employees’ ability to travel or perform necessary business functions, restrict or prevent consumers from having access to our products, or otherwise prevent our suppliers or customers from sufficiently staffing operations, could adversely impact operations necessary for the production, distribution, sale, and support of our products.

Failure of third parties on which we rely, including our customers, suppliers, distributors, commercial banks, and other external business partners, to meet their obligations to the Company or to timely meet those obligations, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, may adversely impact our operations.

Certain of our customers may experience financial difficulties, including bankruptcy or insolvency, as a result of the impact of COVID-19. If any of our customers suffer significant financial difficulties, they may be unable to pay amounts due to us timely or at all. Further, we may have to negotiate significant discounts and/or extended financing terms with these customers in such a situation. If we are unable to collect our accounts receivable as they come due, there may be a material adverse effect on our financial condition, results of operations and cash flows.

If the Company is unable to maintain normal operations, or subsequently is unable to resume normal operations in a timely fashion, its cash flows could be adversely affected, 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

its financial obligations and fund its operations and obtaining such financing is not guaranteed and is largely dependent upon market conditions and other factors.

Disruptions to our operations related to COVID-19 as a result of absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who elect not to come to work due to the illness affecting others at our facilities, or due to quarantines.

The COVID-19 pandemic has led to and could continue to lead to severe disruption and volatility in the United States and global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. In addition, trading prices in the public equity markets, including prices of our common stock, have been highly volatile as a result of the COVID-19 pandemic.

Sustained adverse impacts to the Company, certain suppliers, and customers may also affect the Company’s future 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 finite-lived intangible assets, property and equipment, inventories, accounts receivable, tax assets, and other assets.

The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows is highly uncertain and cannot be accurately predicted and is dependent on future developments, including the duration of the pandemic and the length of its impact on the global economy, as well as any new information that may emerge concerning the COVID-19 pandemic and the actions taken to contain it or mitigate its impact. The continued impact on our business as a result of the COVID-19 pandemic could materially adversely affect our business, results of operations, financial condition, cash flows, prospects and the trading prices of our securities in the near-term and beyond 2020.



ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) None.

(b) None.

Period
Total Number of Shares Purchased ⁽¹⁾

Average Price
Paid Per Share ⁽¹⁾

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾

Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
April 1- April 28, 2019 829
$ 49.00
—
$ 30,306,041
April 29 - June 2, 2019 927
43.11
—
30,306,041
June 3 - June 30, 2019 —
—
—
30,306,041
1,756
—



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share ⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
March 30 - April 26, 2020	—	$	—	—	43,515,568
April 27 - May 31, 2020	2,383	43.43		—	43,515,568
June 1 - June 28, 2020	143	62.37		—	43,515,568
	2,526			—

(1) Represents shares of common stock purchased by the Company for the sole purpose of satisfying the minimum tax withholding obligations of employees upon the vesting of stock awards held by the employees.

(2) See Note 16 toof the Notes to Condensed Consolidated Financial Statements for additional information about the Company's stock repurchase program.



ITEM 6.	EXHIBITS



Exhibits (1)	Description
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer and Chief Financial Officer
101	Interactive Data Files. The following materials are filed electronically with this Quarterly Report on Form 10-Q:



	101.INS	XBRL Instance Document
	101.SCH	XBRL Taxonomy Schema Document
	101.CAL	XBRL Taxonomy Calculation Linkbase Document
	101.DEF	XBRL Taxonomy Definition Linkbase Document
	101.LAB	XBRL Taxonomy Label Linkbase Document
	101.PRE	XBRL Taxonomy Presentation Linkbase Document



104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	PATRICK INDUSTRIES, INC.
	(Registrant)

Date: August ~~2, 2019~~6, 2020	By:	/s/ ~~Todd M. Cleveland~~Andy L. Nemeth
		~~Todd M. Cleveland~~ Andy L. Nemeth
		President and Chief Executive Officer




Date: August ~~2, 2019~~6, 2020	By:	/s/ ~~Joshua~~John A. ~~Boone~~Forbes
		~~Joshua~~ John A. ~~Boone~~Forbes
		~~Vice President-Finance and~~Interim Chief Financial Officer

3934



(thousands)	Contract Liabilities
Revenue recognized that was included in the contract liability balance at the beginning of the period	$	(945	)
Increases due to cash received, excluding amounts recognized as revenue during the period	$	727



Second Quarter Ended July 1, 2018
(thousands)	Defined Benefit Pension		Foreign Currency Items			Total
Balance at April 1, 2018	$	66	28			$	94
Other comprehensive loss (net of tax of $0 and $0)	—		(31		)	(31		)
Balance at July 1, 2018	$	66	$	(3	)	$	63



(thousands)
2019	$	29,345
2020	23,344
2021	16,165
2022	9,602
2023	5,357
Thereafter	4,883
Total	$	88,696

Maximum consolidated total leverage ratio (12-month period)

Minimum consolidated fixed charge coverage ratio (12-month period)