管理層發言
Good morning, ladies and gentlemen, and welcome to Patrick Industries' Second Quarter 2026 Earnings Conference Call. My name is Rob, and I'll be your operator for today's call. Please note that this conference is being recorded. And I'll now turn the call over to Mr. Steve O'Hara, Vice President of Investor Relations. Mr. O'Hara, you may begin.
Good morning, everyone, and welcome to our call this morning. I'm joined on the call today by Andy Nemeth, CEO; Jeff Rodino, President; and Matt Filer, CFO. Certain statements made in today's conference call regarding Patrick Industries and its operations may be considered forward-looking statements under the securities laws. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company's annual report on Form 10-K for the year ended December 31, 2025, and the company's other filings with the Securities and Exchange Commission. Before we begin, I want to briefly address our previously announced merger agreement with LCI Industries. As you would expect, we are limited in what we can say beyond the information that has been publicly disclosed. We remain focused on continuing to execute against our strategic priorities while working through the customary steps required to complete the transaction. I would now like to turn the call over to Andy Nemeth.
Thank you, Steve. Good morning, everyone. We appreciate you joining us on the call. The second quarter's results underscore the continued resilience of Patrick's business as a result of our strategic diversification efforts and reflect many of the same themes we've discussed over the past several quarters. Net sales for the second quarter were $1.04 billion, off less than 1% year-over-year in these uncertain market conditions as revenue growth in our Marine, Powersports and Housing end markets helped offset a decline in our RV revenue, which was heavily impacted by a 16% reduction in RV industry wholesale unit shipments. We estimate overall organic growth contributed 7% during the quarter. And adjusted earnings per diluted share was $1.29, including approximately $0.07 of dilution from our convertible notes and related warrants. On a trailing 12-month basis, net sales were approximately $3.9 billion. Our second quarter results are an important reminder that Patrick is not defined by one cycle or end market. Our targeted investments over the last decade towards strategically diversifying our business model have created a more resilient platform with broader exposure to attractive market categories within the outdoor enthusiast space. As an example, compared to 2019, RV and Marine wholesale unit shipments are both off more than 20%, yet our trailing 12-month net sales were up nearly 70% and our adjusted earnings per share is up more than 60%. We have thoughtfully expanded our capabilities across various end markets while continuing to deepen the technical, operational and commercial expertise that allows us to bring more value-added, cost-effective solutions to our customers from our deep and wide product portfolio. Our teams continue to execute with discipline and a clear focus on staying close to our customers. We are focused on strategically positioning the business based on the current run rates and thoughtfully managing costs while preserving operational flexibility needed to respond quickly as demand patterns evolve. This same discipline is also evident across the industries we serve as OEMs and dealers have continued to prudently manage inventory levels in a way that we believe is healthier than in prior cycles. While this does not eliminate near-term volume pressure, we believe it continues to support positive long-term industry dynamics and positions the channel more effectively for an eventual recovery in demand. We believe elevated domestic fuel prices, higher interest rates, lower consumer confidence and monthly payment and price sensitivity continue to weigh heavily on larger ticket discretionary purchases. Our role for our customers is to be a strong value-added solutions-oriented business partner. This work is showing up in several important ways. Through our value engineering initiatives, advanced manufacturing investments, composite solutions, electrical capabilities, aftermarket platform and the experience, we are helping customers address options and priorities around affordability, production efficiency, labor optimization, product differentiation and speed to market. Across our platforms, we are working closely with customers to partner on low-cost alternatives under a good, better, best product offering, support their product development needs, respond quickly to changing production schedules and help them deliver great products that meet consumers where they're at today, while continuing to grow our content and build a more durable platform over time. At the same time, we are prioritizing industry-leading investments in technology, data analytics and AI-enabled tools that we believe will help further shape our industries for the next era of design and operational excellence. Across Patrick, we are applying these capabilities in practical business-focused ways to improve our own operational performance and respond to customer needs with greater speed and precision. During the quarter, we piloted our first ever internal AI process competition across corporate administrative teams, focused on identifying and rewarding practical applications for automation, analytics and AI. We are also utilizing AI in our aftermarket platform to guide the introduction of new products to market and improve content generation, better capturing consumer attention and engagement across our digital channels. Additionally, we are excited to unveil our new advanced manufacturing and printing technology solution for the RV industry. Jeff will touch on this industry-leading advancement shortly. We also remain opportunistic in managing our balance sheet and the allocation of our capital. Our priorities continue to be centered on reinvesting in our business, supporting strategic and organic growth opportunities, maintaining financial flexibility and returning capital to shareholders. During the quarter, we intentionally increased our leverage profile in the short term and repurchased approximately $91 million of our shares, reflecting our confidence in both Patrick's long-term value creation opportunity and the strength of our cash flows. Finally, I'd like to briefly comment on our recently executed all-stock merger agreement with Lippert. We are incredibly excited about the opportunity ahead and look forward to working closely with key stakeholders as we move through the process. We believe the combination of the amazing Patrick and Lippert teams will create tremendous positive energy to support our customers, enhance our ability to innovate and deliver cost-effective solutions, and better serve the industries we care deeply about in a mutually beneficial way. We believe that together with expanded capabilities and a deeper product offering, we will be able to further enhance the value we can deliver to OEM customers, outdoor enthusiasts, team members and shareholders over the long term. As we have outlined previously, we expect the combination to generate approximately $150 million of net annual run rate cost synergies, allowing us to share savings with our customers in partnership to promote the long-term benefit of our markets with a focus on affordability. The transaction is targeted to close in the first half of 2027, subject to customary shareholder and regulatory approvals. Until closing, we remain two independent companies. And our team's focus is where it has always been, running Patrick's business in the pursuit of delivering the highest quality products and service to our customers. I'll now turn the call over to Jeff, who will highlight the quarter and provide more detail on our end markets.
Thanks, Andy, and good morning, everyone. I'll start with a review of our operating performance by end market, including the key customer channel and product trends we saw during the quarter. Our second quarter RV revenue was $407 million, down 15% from the same period in 2025 and represented 39% of consolidated revenue. RV industry wholesale unit shipments declined by 16% in the quarter, which equates to approximately 15,300 fewer units being shipped. On a trailing 12-month basis, RV content per unit, or CPU, was up 7% to $5,303 and on a quarterly basis, CPU increased 2% year-over-year, highlighting our team's success in continuing to win new business through a period of contraction. RV retail demand has been softer than expected so far this year. Despite some early positive signals at the start of show season, macroeconomic and geopolitical factors have continued to weigh heavily on consumer purchasing behavior. We estimate second quarter 2026 RV retail unit shipments were off 12% to approximately 99,200 compared to RV wholesale unit shipments of approximately 77,600. This implies a seasonal dealer field inventory destock of approximately 21,600 units during the period, resulting in an estimated dealer inventory weeks on hand of approximately 18 to 20 weeks. This is below an estimated 20 to 22 weeks at the end of the first quarter of 2026 and well below the pre-COVID historical averages of 26 to 30 weeks. We remain encouraged by the disciplined production and inventory management across the RV value chain. At Patrick, we are committed to supporting OEM initiatives through product development, unique design services, continued investment in industry-leading technology and product solutions across our end markets. As Andy mentioned, we are now launching our multimillion-dollar advanced digital printing technology on our North American Forest Products campus. This industry-leading technology applies high-quality graphics and textures directly onto a much wider range of substrates, including our composite material. Because we can print straight to the substrate, when compared to traditional laminated vinyl or paper, we can improve design flexibility, manufacturing efficiency and quality while serving both value and premium markets, giving customers everything from cost-competitive finishes to richly textured premium surfaces. We are excited to play a key role in developing and producing the next era of interior and exterior solutions and believe this differentiated capability strengthens our decorative portfolio and creates a new opportunity for both OEM and retail customers. Second quarter Marine revenue increased 22% to $191 million, representing 18% of consolidated net sales, outperforming the marine industry wholesale powerboat unit shipments, which we estimated were flat compared to the prior year period. On a TTM basis, our estimated Marine content per wholesale powerboat unit increased 22% to $4,883. And more importantly, we estimate the majority of this growth was organic in nature. On a quarterly basis, estimated Marine CPU increased 22% year-over-year. We estimate Marine retail and Marine industry wholesale powerboat unit shipments were 57,800 and 38,800, respectively, in the second quarter. This implies a seasonal dealer inventory destock of approximately 19,000 units. Dealer inventory in the field remains lean at an estimated 17 to 19 weeks on hand, down from an estimated 22 to 24 weeks in the first quarter of 2026, remaining well below the pre-COVID historical averages of 36 to 40 weeks. Our Marine performance continues to reflect the strength of our organic growth within our diversified portfolio and the benefit of recent strategic acquisitions within the electrical solutions category. Although Marine consumers have not been immune to the broader macroeconomic pressures mentioned earlier, our exposure is skewed towards mid to higher-end categories that have generally been more resilient. Similar to RV, we continue to see OEMs and dealers focused on inventory management, production alignment and opportunities to improve affordability without compromising the overall consumer experience. Our electrical solutions platform remains another important area of strength within our Marine business. Through the combination of existing capabilities and recently acquired businesses, we are increasingly able to deliver more complete integrated solutions that help customers reduce complexity, avoid production delays and improve overall efficiency. Consistent with our long-term strategy, we are focused on bringing a good-better-best approach to the market, allowing customers to tailor product to consumer preferences, price points and model positioning. Looking ahead, we believe our ability to connect multiple brands into broader solutions will continue to differentiate us. Moving to Powersports. Revenue increased 28% to $123 million in the second quarter versus the prior year period, representing 12% of our second quarter 2026 consolidated sales. Our strong performance this quarter was driven by continued strength in utility-focused units where demand has remained more resilient than in the more discretionary recreational categories. We're encouraged to see some pockets of improvement in certain recreational categories, but remain mindful given the broader consumer discretionary environment. Sportech continues to be an important catalyst and contributor to our Powersports growth story. Consumer demand for cabin closures and other premium utility vehicle content remains healthy. And we are continuing to benefit from OEM adoption of these features. Much like in our other markets, the Sportech team is committed to advancing operational excellence. The team has recently activated AI-enabled camera systems within their facility, streamlining and enhancing quality control and inspection processes, driving greater consistency throughout production. On the Housing side of our business, second quarter revenue was up 2% to $320 million compared to the prior year period, representing 31% of consolidated sales. The increase in our Housing end markets reflects positive contributions from the industrial side of our business, including laminated panels selling into big-box stores, which offset continued softness in MH wholesale unit shipments. Manufactured Housing, or MH, represented 55% of our Housing revenue in the quarter. And we estimate MH wholesale unit shipments decreased 8%. Estimated content per MH unit on a TTM basis was $6,673, flat when compared to the prior year period as we focus on maintaining solid content in a softer demand environment. On a quarterly basis, estimated content per MH unit increased 4% year-over-year. Regarding the 1% decrease in total housing starts, we believe this reflects continued demand constraints related to overall housing affordability, mirroring the factors impacting other big-ticket consumer discretionary products. To that end, we are encouraged by the Road to Housing Act, which became law earlier this month. Over the long term, we believe this new legislation has the potential to unlock some of the pent-up housing demand on both MH and site-built sides. Our Housing businesses and teams are well positioned to benefit from the conversion of pent-up demand for affordable housing. Many studies estimate a significant shortage in affordable housing options in the United States, suggesting a multiyear opportunity to satisfy demand. I'll now turn the call over to Matt Filer, who will provide additional comments on financial performance.
Thanks, Jeff, and good morning, everyone. Consolidated net sales for the quarter were $1.04 billion, off less than 1% from the second quarter of 2025. Revenue increases of 22% in Marine, 28% in Powersports and 2% in Housing end markets helped offset lower revenue in our RV end market attributable to reduced wholesale shipment levels in the quarter. We estimate the year-over-year change in our revenue was comprised of 7% organic growth, 1% acquisition growth and negative 9% industry. Despite the decline in RV revenue, gross margin was 23.8% compared to 23.9% in the second quarter of 2025 as a result of the strategic diversification of our business model. On an adjusted basis, operating margin was 7.5% compared to 8.3% in the prior year period, reflecting a number of factors, including the aforementioned 16% decline in RV wholesale industry unit shipments and higher oil and fuel prices. Our overall effective tax rate was 25.2% for the second quarter compared to 25.3% in the second quarter of 2025. Net income was up 34% to $43 million or $1.28 per diluted share compared to net income of $32 million or $0.96 per diluted share in the prior year quarter. On an adjusted basis, net income was $44 million or $1.29 per diluted share compared to $51 million or $1.50 per diluted share, respectively, in the prior year period. Last year's adjusted net income excluded the impact of one-time costs related to a legal settlement. Reported and adjusted diluted earnings per share for the second quarter of 2026 included approximately $0.07 in additional accounting-related dilution as a result of Patrick's stock price being above the convertible option strike price for our 2028 convertible notes and related warrants. The prior year's diluted EPS included just $0.03 per share. I would like to point out that our basic share count did decline due to the share repurchase completed in the first and second quarters. Adjusted EBITDA was $126 million compared to $135 million last year, while adjusted EBITDA margin was 12.1%, lower by 80 basis points from the second quarter of 2025. Cash provided by operations for the first 6 months of 2026 was $69 million compared to $189 million in the first 6 months of 2025. The year-over-year change reflected working capital investment, including inventory levels that remained elevated, both in support of the company's composite products growth strategy, which began in the second half of 2025 as well as our partnership methodology with our RV customers to continue to mitigate price increases and tariffs in providing good, better, best product offerings. Additionally, the decline in RV shipments has delayed a more fulsome release of inventory balances, especially related to composites and other raw materials. Based on conversations with customers, we expect improved composite adoption in the second half of the year. Purchases of property, plant and equipment were $18 million during the quarter. Available liquidity at the end of the second quarter was approximately $691 million, comprised of approximately $661 million of unused capacity on our revolving credit facility and cash on hand. With no major debt maturities until 2028, we have the financial strength and capital necessary to capture long-term organic and inorganic growth opportunities. At the end of the second quarter, our net leverage was 3.0x. With increased stock repurchases in the quarter and inventory investments we made for the benefit of our customers, our leverage for the second quarter increased from the prior quarter. We expect to bring leverage down in the coming two quarters in alignment with both normal seasonality of working capital needs as well as our operating model to effectively manage inventory turns. In the second quarter, we returned a total of approximately $106 million to shareholders, including quarterly dividends of $15 million and share repurchases totaling $91 million. During the quarter, we repurchased approximately 980,000 shares, reflecting our capital allocation strategy, which is focused on reinvesting in our business while directing capital toward the most attractive opportunities to create long-term shareholder value. We continue to view Patrick's shares as an attractive investment. At quarter end, approximately $62 million remained available under our existing repurchase authorization. Following the signing of the merger agreement on June 30th, we are generally restricted from repurchasing additional shares prior to closing under the agreement's customary interim operating covenants. I'll now turn to our financial outlook, which is based on Patrick as a stand-alone company and does not include the previously announced merger with LCI. We now estimate RV retail will be down low double digits and RV wholesale will be 285,000 to 300,000 units in 2026. In Marine, we continue to estimate retail shipments will be flat to down slightly and wholesale shipments will be up low single digits in 2026. In our Powersports end market, we continue to expect both full-year unit shipments and organic content to be up low single digits, implying an overall mid-to-high single-digit increase for our business. For Housing, we continue to estimate MH wholesale unit shipments and total new housing starts will both be down low to mid-single digits for 2026. Based on the revisions to our end market shipments, we now expect our 2026 adjusted operating margin will be flat versus 2025. However, in alignment with our commitment to our partnership with customers and the industries we serve, we are proactively in the marketplace working with customers with incremental volume-based programs in the second half of 2026 to help address affordability. This may negatively impact margins by an additional 20 basis points versus 2025. We have also updated our 2026 operating cash flow, which we now estimate will be between $320 million and $350 million, with capital expenditures totaling between $70 million to $80 million and implying free cash flow of approximately $250 million. For 2026, we continue to estimate that our effective tax rate will be 24% to 25%. That completes my remarks. We are now ready for questions.
分析師問答
Our first question is from the line of Scott Stember with ROTH Capital.
This morning, a large dealer indicated that sales in July took a little bit of a step down from what we've already seen being weak in the second quarter. Can you talk about what you're seeing with your touch points? And how are you envisioning production levels as we go through the summer and heading into the model year changeover in open house?
Scott, this is Jeff. We primarily are looking at the production numbers versus what they reported earlier as far as what they saw in July. It's different pockets with different OEMs as far as what they've said as far as the retail numbers in June and July. Some have been positive, some have not been as positive as others. As far as production levels, as we expected. And really, when you see the outlook that Matt talked about at 285 to 300, the production levels as we see those going into July and August, we are seeing those go down from where we were in the first half of the year. So they're tracking about where we're at. I know the OEMs are starting to do some sneak peeks with their new models and what they plan on showing at open house. And the hope is that at the open house, we'll be able to see some additional orders to get through the end of the year. But certainly, it's the OEMs and the dealers working together based on what retail is doing to determine the production numbers that we're seeing.
Got it. And Matt, you made a comment finishing up about — I think it was about working with OEMs, I guess, on pricing for affordability. Maybe just give us a little snippet of what's going on? And when that could start to work its way into the marketplace to make units more affordable?
Scott, this is Andy. I'll take that one. Yes, we've been really thoughtful about partnering with our customers, especially in these dynamic times. As we look to the back half and really see this as an opportunity to demonstrate our partnership and help our OEM partners address the affordability issue, it's consistent with themes we've discussed before, especially our ability to bring solutions to customers and drive value engineering opportunities to reduce costs. Our procurement strength, our ability to work with customers on production and model configuration, and our capacity to provide custom solutions enable us to help drive costs lower. We can do this because of the size and scale that we've got and our ability to flex with customers. As we're looking at these opportunities, we want to be out there in the second half, aggressively demonstrating that. The volume opportunities for us, especially if we can use procurement abilities to discount inventory, allow us to transfer cost savings to customers. So we think this is a great opportunity to be on offense, in many different ways, but certainly in partnership with our customers to help address affordability.
Got it. And then just lastly on Powersports, tremendous growth there, increased attachment rates, notably for, I guess, the cabin closures. One of your bigger customers a couple of days ago reported that they're seeing some increased demand in the AI data center end markets. Are you seeing anything on that front? And also, are you seeing increased adoption from other OEMs outside of the ones that we've talked about?
So our production and orders with those customers are in alignment with what they're seeing. We move parallel because of the products that we supply to those markets. Incrementally, everyone is participating. We're seeing not only the data center volume, but more importantly, the uptake rate on cabin closures in side-by-side units has continued to increase, which has been positive for our Powersports business.
Our next questions are from the line of Noah Zatzkin with KeyBanc Capital Markets.
I guess, first, in Marine, obviously really strong performance there. So what's kind of driving that from a content perspective? And then from an end market perspective, just any thoughts around kind of what you're seeing there maybe relative to RV would be helpful.
Sure, Noah. In the Marine side, our solutions efforts are really starting to generate some positive traction. Our tower and windshield solutions, our electrical solutions, our digital systems, our SeaDek flooring programs, and fuel tanks are all gaining traction, especially as we work with customers similarly to how we work in the RV side. From a solutions perspective, we're gaining share on the Marine side because of our ability to put those solutions together. We're seeing resilience at the mid to high end in the Marine sector today, so mid to high-end boats are definitely moving right now. That's been a positive for us, especially with our mix geared toward that sector. So it's all been positive in Marine and fairly resilient. We're excited about the content growth, and the team has done an excellent job gaining traction on solutions. There's a lot of opportunity ahead as well.
Great. Very helpful. And then maybe just one on kind of the capacity side. Like how are you guys thinking about capacity? Have you made any changes with kind of the lower RV end market outlook? And then just any thoughts around your ability to flex if retail were to return next year?
Yes. We are making some capacity adjustments across the platform, but we're not losing scalability. We're optimizing operations around the current run rate environment to be able to continue to run at these levels, control what we can control and provide solutions for customers while maintaining flexibility. We've taken a little bit of capacity out, but nothing that I feel will constrain us, especially if there's an inflection in retail.
The next questions are from the line of Craig Kennison with Baird.
I'm wondering if you could just add broader commentary around commodity pressures that you may be seeing in your business.
Craig, really, we've seen commodities level off. There's some areas, like certain metals, where we've seen a little relief. We're monitoring that. Overall, we haven't had any major changes in commodities in the last quarter. We have seen some developments on the imported luan side and we've bought in inventory to mitigate that for our customers going forward. We expect the effects to take hold toward the end of the third and into the fourth quarter. There was some antidumping and countervailing action on luan plywood from Indonesia. We're monitoring that and keeping an eye on it, but to date we haven't passed anything along to customers.
One important thing to add is that with imported plywood dynamics and our inventory levels, we've invested heavily in our composites program, which we believe has a tremendous future. As plywood pricing rises relative to composites, we would expect some transition to composites, given the total cost proposition. Because of our buying practices and strategies, we've been able to partner with customers and hold off on passing through pricing related to some dumping duties. It has impacted our composites inventory pace a bit, so we haven't had the turns we wanted. But in partnership with our customers, we've been able to flex and mitigate pricing pressure. We feel good about where commodities are, but we do expect to see some effects from countervailing and antidumping duties on imported plywood. We have offsets and expect to continue partnering with customers to address affordability.
Yes. And on the Powersports side, if I look at things right, I believe you had very robust growth in the quarter, up 28%. But I think your guidance calls for more of like mid-single-digit units in shipments and content per unit. Is there a reason why things would slow? Is it a function of lapping very strong results? Just trying to understand that dynamic.
No, I think we're optimistic that we will continue to see traction there. We've been pleasantly surprised with take rates on cabin closures in the Powersports sector above our expectations and hope that continues. We're thoughtful about current market conditions, but our hope is for continued positive trajectory on take rates and strong demand. We're cautiously optimistic and believe there's tremendous opportunity for our products given the traction and customer partnerships we've established.
Our next question is from the line of Daniel Moore with CJS Securities.
Just looking ahead, obviously another quarter of strong discipline, both in the RV and Marine space from a dealer perspective. How much lower can RV and Marine inventory levels go? What have we seen in the past? And when do we start to maybe risk loss of incremental sales? I recognize we're in a tough dynamic market right now, but just a little historic perspective would be helpful.
Sure. I think today there's capacity across the spectrum to support an inflection in retail. We're encouraged by the discipline at the dealer and OE levels managing production schedules and dealer inventories, especially judging by weeks on hand. In our estimates, dealers may take another week out at the end of the year compared to last year, and that's built into our model because they can maintain that discipline. We're positioned to flex and scale very quickly, and OEs are positioned to scale quickly as well. I don't anticipate constraints, given current inventory positions. In fact, we're optimistic because inventories are lean, and that creates upside potential. We do believe there will need to be some restock when retail inflects, not necessarily back to historical weeks on hand levels, but some restock to support demand. There's capacity across the platform to support that.
Helpful. And just clarifying Matt's comments around volume-based pricing offerings and initiatives looking into the back half of the year. So the potential impact of an incremental 20 basis points beyond the updated guidance, which potentially offset by incremental share and volume gains. Is that the right kind of way to think about it?
Yes. We view this as an opportunity to embed our partnership with customers and provide programs to address affordability. We may sacrifice some margin because of that to benefit the long-term health of the industry and strengthen relationships with customers. We want to demonstrate that partnership, and we have the capacity, resources and procurement strategies to support that and share benefits with customers. We look at this as an opportunity to be proactive and opportunistic given current volume levels, and we believe our platform supports it. That said, we could see some offset through absorption if we pick up volume, which is why we said up to potentially 20 basis points.
Perfect. Last for me. Working capital, obviously some strategic initiatives building out the good, better, best and some of the new growth areas as well. Looking to the back half of the year, do you expect working capital to continue to build? Or could that be a source of incremental cash generation?
I think it's a source of cash generation. We look to bring our turns back up a little bit. We did make intentional buys on the composite side and also partnered with customers on managing imported plywood products and pricing, especially related to duties. We view this as a partnership and expect working capital to be a source of cash generation in the back half, while staying on offense—continuing to position the business for the long term and support scalability should an inflection occur.
Our next questions are from the line of Joe Altobello with Raymond James.
So first question, maybe more of a point of clarification on the commentary around working with customers to address affordability issues. Is it that you might see 20 basis points or so of margin degradation, but you'll pick up more volume. So the impact on operating profit dollars is probably going to be neutral?
That's a possibility for sure. As we look at things, it's really about embedding partnership for the future. From a volume perspective and leveraging our fixed cost base given current shipment levels, there's an opportunity to offset some margin sacrifice through increased volume and improved absorption. We said up to potentially 20 basis points because that reflects a range where we might see some trade-offs between margin and volume.
Okay. And in terms of shipments, obviously they've been very weak to say the least. But it seems like mix is improving. Are you guys seeing that on your end in terms of more Class Cs, more fifth wheels, et cetera?
We're seeing a little bit of that, Joe. It hasn't really returned to what we would call the traditional mix in the marketplace. It's skewed so much toward the lower end in the last couple of years that every improvement is beneficial, but not enough yet to move the needle significantly. We've seen some better activity in motorized units where we may have a bit more content, such as paint and other features, but overall it's not a big enough move to be a material difference yet.
Okay. And maybe last one for me on pricing. You mentioned that commodity costs have leveled off here. How much should pricing play in terms of revenue growth in the back half of the year?
We don't have pricing built into our back half revenue assumptions. We expect it to be neutral in the back half.
The next question is from the line of Tristan Thomas-Martin with BMO Capital Markets.
Just one quick clarification for your '26 wholesale unit guidance. Are you assuming shipments and production are in line?
I didn't hear the last part of that.
Shipments and production are in line with each other.
Yes.
Okay. And then just are you seeing any of the OEMs kind of trade down the good-better-best price points?
We're definitely seeing interest in some of the programs and options we have for good, better, best. OEMs are interested in different product options to help address affordability, so yes, there's interest.
Okay. And is that potential trade down included in that essentially 20 basis points of margin headwinds or no?
Yes. Yes, that's included.
Okay. And then just maybe a Jeff question. The digital printing, is there any way to think about sizing or kind of impact or margin profile or anything you can give us would be helpful.
Yes. We're really excited about this digital printing process. It hasn't come without years of research and development from our team to get to where we are today. We really think it will move the needle in how we think about interior panels within an RV. From a pricing standpoint, we're working through that. It's going to be very competitive with traditional laminated products, but it gives a lot more flexibility to design and develop quickly, and to service product over time because we can print one-off panels. There are many exciting features to what we're doing, and customer reception has been very positive. We're looking forward to how that develops. Right now, we're working on traditional sized panels, and in coming quarters you'll probably hear more about additional developments as we work toward more advanced parts for OEMs.
Thank you. Ladies and gentlemen, I'll turn the call over to Andy Nemeth for closing remarks.
I just want to finish up by really thanking our team for tremendous efforts in very dynamic market conditions. The energy of the team and the spirit across the platform has been inspiring, especially given some volatility in certain markets and upside potential in others. We also want to thank our customers for their partnership. Looking at market conditions and volatility, we feel like this is a great opportunity to further embed our value proposition with customers. As we look at our ability to generate cash and be thoughtful in our capital allocation strategy and reinvestment in the business, we see a ton of opportunity and believe we can be on offense. Our M&A pipeline is starting to gain traction, and we're seeing possibilities to continue to execute in the back half of the year. We feel optimistic about what we can do despite market conditions and remain focused on controlling what we can control. We're feeling good about where Patrick is positioned, excited about the team, and I'm really excited about opportunities to further partner with customers. With that, we look forward to talking to you at the end of the next quarter.
Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.