v3.26.3
ACQUISITIONS
 9 Months Ended
Sep. 27, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
ACQUISITIONS ACQUISITIONS
General 
Business combinations generally take place to strengthen Patrick's positions in existing markets and increase its market share and product offerings, expand into additional markets, and gain key technologies. Acquisitions are accounted for under the acquisition method of accounting. For each acquisition, the excess of the purchase consideration over the fair value of the net assets acquired is recorded as goodwill, which generally 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, market share growth and net income.
The Company completed three acquisitions during the nine months ended September 27, 2026 (the "2026 Acquisitions"), including one acquisition during the three months ended September 27, 2026. Acquisition-related costs associated with the 2026 Acquisitions were immaterial. Net sales included in the Company's condensed consolidated statements of income related to the 2026 Acquisitions were $2.6 million and $4.4 million for the three and nine months ended September 27, 2026, respectively, and operating income was $0.7 million and $1.0 million for the three and nine months ended September 27, 2026, respectively. Assets acquired and liabilities assumed in the acquisitions were recorded on the Company's condensed consolidated balance sheet at their estimated fair values as of the respective dates of acquisition. For each acquisition, the Company completes its allocation of the purchase price to the fair value of acquired assets and liabilities within a one year measurement period.
The Company completed one acquisition during the three months ended September 28, 2025 and three acquisitions during the nine months ended September 28, 2025. Acquisition-related costs associated with such acquisitions were immaterial. For the three and nine months ended September 28, 2025, net sales included in the Company's condensed consolidated statements of income related to the acquisitions completed in the nine months ended September 28, 2025 were $11.0 million and $24.2 million, respectively, and operating income was $0.1 million and operating losses were $0.3 million, respectively.
In connection with certain acquisitions, the Company is required to pay additional cash consideration if certain financial results of the acquired businesses are achieved. The Company records a liability for the estimated fair value of the contingent consideration related to each of these acquisitions as part of the initial purchase price based on the present value of the expected future cash flows and the probability of future payments at the date of acquisition.
Changes in the contingent consideration liability are as follows:
Three Months EndedNine Months Ended
($ in thousands)September 27, 2026September 28, 2025September 27, 2026September 28, 2025
Fair value at beginning of period$1,761 $3,776 $2,445 $3,608 
Additions1,875 500 1,875 2,300 
Fair value adjustments— (1,098)1,098 (2,698)
Settlements(11)(16)(1,793)(48)
Fair value at end of period$3,625 $3,162 $3,625 $3,162 
The following table shows the balance sheet location of the fair value of contingent consideration and the maximum amount of contingent consideration payments the Company may be subject to:
($ in thousands)September 27, 2026December 31, 2025
Accrued liabilities$1,900 $1,383 
Other long-term liabilities1,725 1,062 
Total fair value of contingent consideration$3,625 $2,445 
Maximum amount of contingent consideration$9,228 $9,343 
2026 Acquisitions
The Company completed three acquisitions during the nine months ended September 27, 2026. Total cash consideration for the 2026 Acquisitions was approximately $22.2 million, plus contingent consideration over a two-year period based on future performance in connection with one acquisition and a working capital holdback in connection with two acquisitions. As the Company finalizes the fair value of the acquired assets and assumed liabilities, additional purchase price adjustments may be recorded during the measurement period. Changes to preliminary purchase accounting estimates recorded during the three and nine months ended September 27, 2026 related to the 2026 Acquisitions were immaterial.
2025 Acquisitions
The Company completed five acquisitions during the year ended December 31, 2025 (the "2025 Acquisitions"). Total cash consideration for the 2025 Acquisitions was approximately $118.4 million, plus contingent consideration over a less than two-year period based on future performance in connection with certain acquisitions. Purchase price allocations and all valuation activities in connection with three of the 2025 Acquisitions have been finalized. Changes to preliminary purchase accounting estimates recorded during the three and nine months ended September 27, 2026 related to the 2025 Acquisitions were immaterial.
The following table summarizes the fair values of the assets acquired and the liabilities assumed as of the date of each of the 2026 Acquisitions and 2025 Acquisitions:
($ in thousands)
2026
Acquisitions
2025
Acquisitions
Consideration:
Cash, net of cash acquired$22,240 $118,434 
Working capital holdback and other, net250 — 
Contingent consideration (1)
1,875 2,950 
Total consideration$24,365 $121,384 
Assets Acquired:
Trade receivables$1,461 $8,976 
Inventories2,189 18,617 
Prepaid expenses & other61 473 
Property, plant & equipment1,989 29,904 
Operating lease right-of-use assets99 1,428 
Identifiable intangible assets:
Customer relationships14,646 24,530 
Non-compete agreements39 500 
Patents and developed technology— 4,970 
Trademarks— 6,360 
Liabilities Assumed:
Current portion of operating lease obligations(80)(534)
Accounts payable & accrued liabilities(1,348)(7,780)
Operating lease obligations(19)(895)
Total fair value of net assets acquired19,037 86,549 
Goodwill (2)
5,328 34,835 
Total purchase price allocation$24,365 $121,384 
(1)These amounts reflect the acquisition date fair value of contingent consideration based on expected future results relating to certain acquisitions.
(2)Goodwill is tax-deductible for the 2026 Acquisitions and 2025 Acquisitions.
We estimate the value of acquired property, plant, and equipment using a combination of the income, cost, and market approaches, such as estimates of future income growth, capitalization rates, discount rates, and capital expenditure needs of the acquired businesses.
We estimate the value of customer relationships using the multi-period excess earnings method, which is a variation of the income approach, calculating the present value of incremental after-tax cash flows attributable to the asset. Non-compete agreements are valued using a discounted cash flow approach, which is a variation of the income approach, with and without the individual counterparties to the non-compete agreements. Trademarks and patents are valued using the relief-from-royalty method, which applies an estimated royalty rate to forecasted future cash flows, discounted to present value.
The estimated useful life for customer relationships is 10 years. The average estimated useful life for non-compete agreements is 5 years. The estimated useful life for patents is 13 years, individually ranging from 10 to 18 years. Trademarks have an indefinite useful life.
Pro Forma Information (Unaudited)
The following pro forma information for the three and nine months ended September 27, 2026 and September 28, 2025 assumes the 2026 Acquisitions and 2025 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 2026 Acquisitions and 2025 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 incremental borrowings incurred in connection with each transaction. In addition, the pro forma information includes incremental amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of $0.2 million and $0.7 million for the three and nine months ended September 27, 2026, respectively, and $0.7 million and $1.8 million for the three and nine months ended September 28, 2025, respectively.
Three Months Ended
Nine Months Ended
($ in thousands, except per share data)September 27, 2026September 28, 2025September 27, 2026September 28, 2025
Net sales$977,027 $990,797 $3,023,454 $3,066,016 
Net income$20,998 $35,756 $102,725 $106,314 
Basic earnings per common share$0.67 $1.10 $3.21 $3.27 
Diluted earnings per common share$0.64 $1.02 $3.00 $3.09 
The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisitions been consummated as of the periods indicated above.