Q2 2026 BlueLinx Holdings Inc Earnings Call

August 5, 2026

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the BlueLinx Holdings Q2 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode, and today's call is being recorded. We will begin with opening remarks and introductions. At this time, I would like to turn the conference over to your host, Investor Relations Officer, Thomas Morabito. Please go ahead.

Speaker #1: Ladies and gentlemen, thank you for standing by, and welcome to the BlueLinx Holdings Q4 2026 earnings conference call. At this time, all participants are in a listen-only mode, and today's call is being recorded.

Speaker #1: We will begin with opening remarks and introductions. At this time, I would like to turn the conference over to your host, Investor Relations Officer Thomas Morabito.

Speaker #1: Please go ahead.

Speaker #2: Thank you, operator, and welcome to the BlueLinx Q4 2026 earnings call. Joining me on today's call is Shyam Reddy, our Chief Executive Officer, and Kelly Wall, our Chief Financial Officer and Treasurer.

Thomas Morabito: Thank you operator. Welcome to the BlueLinx Q2 2026 earnings call. Joining me on today's call is Shyam Reddy, our Chief Executive Officer, and Kelly Wall, our Chief Financial Officer and Treasurer. At the end of today's prepared remarks, we'll take questions. Our Q2 news release and Form 10-Q were issued yesterday after the close of the market, along with our webcast presentation, and these items are available in the investor section of our website. We encourage you to follow along with the detailed information on the slides during our webcast. Today's discussion contains forward-looking statements. Actual results may differ significantly from those forward-looking statements due to various risks and uncertainties, including the risks described in our most recent SEC filings. Today's presentation includes certain non-GAAP and adjusted financial measures that we believe provide helpful context for investors evaluating our business.

Tom Morabito: Thank you operator. Welcome to the BlueLinx Q2 2026 earnings call. Joining me on today's call is Shyam Reddy, our Chief Executive Officer, and Kelly Wall, our Chief Financial Officer and Treasurer. At the end of today's prepared remarks, we'll take questions. Our Q2 news release and Form 10-Q were issued yesterday after the close of the market, along with our webcast presentation, and these items are available in the investor section of our website. We encourage you to follow along with the detailed information on the slides during our webcast. Today's discussion contains forward-looking statements. Actual results may differ significantly from those forward-looking statements due to various risks and uncertainties, including the risks described in our most recent SEC filings. Today's presentation includes certain non-GAAP and adjusted financial measures that we believe provide helpful context for investors evaluating our business.

Speaker #2: At the end of today's prepared remarks, we'll take questions. Our Q2 news release and Form 10-Q were issued yesterday after the close of the market, along with our webcast presentation, and these items are available in the Investor section of our website.

Speaker #2: We encourage you to follow along with the detailed information on the slides during our webcast. Today's discussion contains forward-looking statements. Actual results may differ significantly from those forward-looking statements due to various risks and uncertainties, including the risks described in our most recent SEC filings.

Speaker #2: Today's presentation includes certain non-GAAP and adjusted financial measures that we believe provide helpful context for investors evaluating our business. Reconciliations to the closest GAAP financial measure can be found in the appendix of our presentation.

Thomas Morabito: Reconciliations to the closest GAAP financial measure can be found in the appendix of our presentation. Now I'll turn it over to Shyam.

Tom Morabito: Reconciliations to the closest GAAP financial measure can be found in the appendix of our presentation. Now I'll turn it over to Shyam.

Speaker #2: Now, I'll turn it over to Shyam.

Speaker #3: Thanks, Tom. Good morning, everyone. Our Q2 results, once again, demonstrate our ability to deliver profitable sales growth in a challenging market environment. Validating the strength of our channel and product strategies.

Shyam Reddy: Thanks, Tom. Good morning, everyone. Our Q2 results once again demonstrate our ability to deliver profitable sales growth in a challenging market environment, validating the strength of our channel and product strategies. Our disciplined execution led to volume growth at solid margins across key customer channels and multiple product types. We believe our results reflect market share gains since we're operating in another year of single and multi-family housing start declines and tepid repair and remodel activity. During the Q2, net sales increased more than 4% year-over-year, driven by Destaro specialty product sales, higher volumes in key specialty product categories, and improved pricing across multiple product categories. We also continued to experience favorable pricing and volumes for lumber and structural products.

Speaker #3: Our disciplined execution, led to volume growth at solid margins, across key customer channels in multiple product types. We believe our results reflect market share gains since we're operating in another year of single and multi-family housing start declines in tepid repair and remodel activity.

Speaker #3: During the Q2, net sales increased more than 4% year over year, driven by DeStero's specialty product sales, higher volumes in key specialty product categories, and improved pricing across multiple product categories.

Speaker #3: We also continue to experience favorable pricing and volumes for lumber and structural products. Specialty gross margin was 18.7%, excluding the benefit of an import duty-related item, and structural gross margin was 10.9%; both of which reflect the strength of our customer value proposition and effective inventory management.

Shyam Reddy: Specialty gross margin was 18.7%, excluding the benefit of an import duty-related item, and structural gross margin was 10.9%, both of which reflect the strength of our customer value proposition and effective inventory management. Our channel strategy continues to fuel our branded specialty product expansion, both geographically and SKU wise with strategic suppliers. Engineered wood, siding, millwork industrial, outdoor living, and other specialty products represented approximately 70% of net sales and 80% of gross profit in the quarter. The momentum from the multifamily channel efforts, builder pull-through programs, and national accounts focus, all key commercial growth strategies, continue to drive our financial results and generate value for our entire customer base. Specifically, these initiatives are helping us drive volume growth and share gains by converting projects and customers to the strategic brands and products we carry, thereby strengthening our position as a preferred commercialization partner for suppliers.

Speaker #3: Our channel strategy continues to fuel our branded specialty product expansion, both geographically and SKU-wise, with strategic suppliers, engineered wood, siding, millwork, industrial, outdoor living, and other specialty products represented approximately 70% of net sales and 80% of gross profit in the quarter.

Speaker #3: The momentum from the multi-family channel efforts, builder pull-through programs, and national accounts focus all key commercial growth strategies continue to drive our financial results and generate value for our entire customer base.

Speaker #3: Specifically, these initiatives are helping us drive volume growth and share gains by converting projects and customers to the strategic brands and products we carry, thereby strengthening our position as a preferred commercialization partner for suppliers.

Speaker #3: The virtuous cycle is leading to stickier relationships with both. Suppliers want partners who can help them grow across multiple channels and markets in a fast-paced, dynamic landscape, and that's what we're doing.

Shyam Reddy: The virtuous cycle is leading to stickier relationships with both. Suppliers want partners who can help them grow across multiple channels and markets in a fast-paced, dynamic landscape. That's what we're doing. Our value-add services and enhanced capabilities enable us to execute our strategic initiatives at scale and to accelerate both customer and supplier growth objectives, no matter the market conditions. Our disruptive go-to-market approach is unlocking commercial growth opportunities for both customers and suppliers, thereby differentiating us in the marketplace. We have driven volume growth and share gain in key customer channels, such as multifamily and key national accounts, demonstrating another quarter of key channel growth. We've also expanded our geographic footprint faster than before with key suppliers like Huber, Louisiana-Pacific, Georgia-Pacific, Royal Westlake, and RDI. We even have national distribution rights for Georgia-Pacific on key specialty product lines that support our multifamily efforts.

Speaker #3: Our value-add services and enhanced capabilities enable us to execute our strategic initiatives at scale and to accelerate both customer and supplier growth objectives, no matter the market conditions.

Speaker #3: Our disruptive go-to-market approach is unlocking commercial growth opportunities for both customers and suppliers, thereby differentiating us in the marketplace. We have driven volume growth and share gain in key customer channels, such as multi-family and key national accounts, demonstrating another quarter of key channel growth.

Speaker #3: We've also expanded our geographic footprint faster, than before, with key suppliers like Huber, Louisiana Pacific, Georgia Pacific, Royal Westlake, and RDI. We even have national distribution rights for Georgia Pacific on key specialty product lines that support our multi-family efforts.

Speaker #3: A new partnership with Trex was also announced that gives BlueLinx distribution rights in 11 markets, located in our central, north, and south regions. This recent award on the part of Trex—a national distribution rights we have with Georgia Pacific and the accelerated expansion rights provided by our other key strategic suppliers—demonstrate the merits of the commercialization accelerant we are providing to key vendors via our channel focus.

Shyam Reddy: A new partnership with Trex was also announced that gives BlueLinx distribution rights in 11 markets located in our central, north, and south regions. This recent award on the part of Trex, the national distribution rights we have with Georgia-Pacific, and the accelerated expansion rights provided by our other key strategic suppliers demonstrate the merits of the commercialization accelerant we are providing to key vendors via our channel focus. Our results also demonstrate the benefits of disciplined inventory management and strong execution. Our ability to quickly align inventory levels with changing market conditions reflects the strength of our operating discipline and commercial capabilities. As market conditions improve, we expect these capabilities to help support even stronger cash flow generation. We are also making meaningful progress on our AI and digital transformation initiatives, several of which are designed to enhance commercial activities, fine-tune our inventory management capabilities, and generate e-commerce sales.

Speaker #3: Our results also demonstrate the benefits of disciplined inventory management and strong execution. Our ability to quickly align inventory levels with changing market conditions reflects the strength of our operating discipline and commercial capabilities.

Speaker #3: As market conditions improve, we expect these capabilities to help support even stronger cash flow generation. We are also making meaningful progress on our AI and digital transformation initiatives, several of which are designed to enhance commercial activities fine-tune our inventory management capabilities, and generate e-commerce sales.

Speaker #3: We also remain committed to supporting the advanced digital platforms of our largest customers to accelerate channel growth. Finally, our financial position remains strong, with $655 million in available liquidity at the end of the quarter, providing us with the flexibility to reinvest in the business and to pursue strategic growth opportunities.

Shyam Reddy: We also remain committed to supporting the advanced digital platforms of our largest customers to accelerate channel growth. Our financial position remains strong, with $655 million in available liquidity at the end of the quarter, providing us with the flexibility to reinvest in the business and to pursue strategic growth opportunities. For a few more highlights on our second quarter results. We generated net sales of $814 million and adjusted EBITDA of $35.6 million for a 4.4% adjusted EBITDA margin, a significant improvement on a year-over-year basis. Destaro, which we acquired in Q4 2025, contributed nearly $25 million of net sales and $2.7 million in adjusted EBITDA. Adjusted net income was $9.1 million, or $1.15 per diluted share. The strategic sales and product expansion efforts are what led to these higher volumes and increased net sales at solid margins.

Speaker #3: Now, for a few more highlights on our Q2 results. We generated net sales of $814 million, an adjusted EBITDA of $35.6 million, for a 4.4% adjusted EBITDA margin, a significant improvement on a year-over-year basis.

Speaker #3: DeStero—which we acquired in Q4 2025—contributed nearly $25 million of net sales and $2.7 million in adjusted EBITDA. Adjusted net income was $9.1 million.

Speaker #3: Or $1.15 per diluted share. The strategic sales and product expansion efforts are what led to these higher volumes and increased net sales at solid margins.

Speaker #3: For example, multi-family and national accounts continue to perform well, with volumes up 11% and 2% year-over-year, respectively. Our builder pull-through programs supported by strategic customer partnerships also contributed growth across key channels and specialty product categories.

Shyam Reddy: For example, multifamily and national accounts continued to perform well, with volumes up 11% and 2% year over year respectively. Our builder pull-through program, supported by strategic customer partnerships, also contributed growth across key channels and specialty product categories. In addition, our differentiated value proposition, combined with geographic and SKU expansion with key suppliers, drove meaningful year over year growth across multiple product lines that are aligned with our channel growth strategy. The newly announced Trex relationship demonstrates the merits of our strategy, and we look forward to validating it for them and supporting our customers' commercial objectives. We're especially proud of our solid gross and EBITDA margin performance in spite of cost inflation, freight challenges, and a competitive pricing environment. For example, diesel fuel costs and flatbed freight rates are up 50% and nearly 17% on a year over year basis respectively.

Speaker #3: In addition, our differentiated value proposition, combined with geographic and SKU expansion with key suppliers, drove meaningful year-over-year growth across multiple product lines that are aligned with our channel growth strategy.

Speaker #3: The newly announced Trex relationship demonstrates the merits of our strategy, and we look forward to validating it for them in supporting our customers' commercial objectives.

Speaker #3: We're especially proud of our solid growth and EBITDA margin performance in spite of cost inflation and freight challenges, and a competitive pricing environment. For example, diesel fuel costs and flatbed freight rates are up 50% and nearly 17% on a year-over-year basis, respectively.

Speaker #3: We've also dealt with approximately 60 cost increases from suppliers through Q2 2026 compared to around 20 through Q2 2025, yet we performed well for another consecutive quarter.

Shyam Reddy: We've also dealt with approximately 60 cost increases from suppliers through Q2 2026, compared to around 20 through Q2 2025, yet we performed well for another consecutive quarter. These results reflect disciplined execution of our product and channel strategies, supported by operational and business excellence initiatives that relate to effective pricing and cost passthrough, strategic value-add services, exceptional customer service, branded product expansion, and disciplined inventory management. Overall, our Q2 results reflect continued momentum and solid financial performance despite low consumer confidence, persistent inflation, economic uncertainty, and geopolitical volatility driving weakness in the housing and repair and remodel markets. Our strategy is working, so we remain focused on executing it through the cycle and positioning BlueLinx for accelerated growth when the industry recovers. I want to thank our associates for the dedication they bring every day to our customers, suppliers, one another, and the communities we serve.

Speaker #3: These results reflect disciplined execution of our product and channel strategies, supported by operational and business excellence initiatives that relate to effective pricing and cost pass-through, strategic value-add services, exceptional customer service, branded product expansion, and disciplined inventory management.

Speaker #3: Overall, our Q2 results reflect continued momentum and solid financial performance, despite low consumer confidence, persistent inflation, economic uncertainty, and geopolitical volatility driving weakness in the housing and repair and remodel markets.

Speaker #3: Our strategy is working, so we remain focused on executing it through the cycle, and positioning BlueLinx for accelerated growth when the industry recovers. I want to thank our associates for the dedication they bring every day to our customers, suppliers, one another, and the communities we serve.

Speaker #3: Now, I'll turn it over to Kelly, who will provide more details on our financial results and our capital structure.

Shyam Reddy: Now, I'll turn it over to Kelly, who will provide more details on our financial results and our capital structure.

Speaker #2: Thanks, Shyam. And good morning, everyone. Let's first go through the consolidated highlights for the quarter. Overall, both specialty products and structural products delivered solid sales growth and gross margins in what continues to be a challenging new home construction and repair and remodel market.

Christopher Kelly Wall: Thanks, Sham, and good morning, everyone. Let's first go through the consolidated highlights for the quarter. Overall, both specialty products and structural products delivered solid sales growth and gross margins in what continues to be a challenging new home construction and repair and remodel market. Net sales for Q2 2026 were $814 million, up over 4% year over year. Total gross profit was $140 million, and gross margin was 17.2%, up from 15.3% in the prior year period. As Sham mentioned, Q2 results included a $7.2 million duty-related benefit. Excluding this benefit, gross margins for Q2 2026 were 16.3%. SG&A was $107 million, up $12 million from last year's Q2. This increase was mainly due to the acquisition of Destaro in Q4 last year, fuel and third-party freight expenses, and employee-related expenses.

Kelly Wall: Thanks, Sham, and good morning, everyone. Let's first go through the consolidated highlights for the quarter. Overall, both specialty products and structural products delivered solid sales growth and gross margins in what continues to be a challenging new home construction and repair and remodel market. Net sales for Q2 2026 were $814 million, up over 4% year over year. Total gross profit was $140 million, and gross margin was 17.2%, up from 15.3% in the prior year period. As Sham mentioned, Q2 results included a $7.2 million duty-related benefit. Excluding this benefit, gross margins for Q2 2026 were 16.3%. SG&A was $107 million, up $12 million from last year's Q2. This increase was mainly due to the acquisition of Destaro in Q4 last year, fuel and third-party freight expenses, and employee-related expenses.

Speaker #2: Net sales for the Q2 of 2026 were $814 million. Up over 4% year-over-year. Total gross profit was $140 million. And gross margin was 17.2%, up from 15.3% in the prior year period.

Speaker #2: As Shyam mentioned, Q2 results included a 7.2 million dollar duty-related benefit. Excluding this benefit, gross margins for Q2 of 2026 were 16.3%. SG&A was $107 million.

Speaker #2: Up $12 million from last year's Q2. This increase was mainly due to the acquisition of DeStero in Q4 last year, fuel and third-party freight expenses, and employee-related expenses.

Speaker #2: Given the challenging demand environment and continued pressure on operating costs, consistent with prior quarters, we remain focused on disciplined expense management and identifying additional opportunities to improve efficiency.

Christopher Kelly Wall: Given the challenging demand environment and continued pressure on operating costs, consistent with prior quarters, we remain focused on disciplined expense management and identifying additional opportunities to improve efficiency. Net income for the quarter was $6.4 million, or $0.81 per diluted share. Adjusted net income was $9.1 million, or $1.15 per diluted share, up approximately 64%. Our effective income tax rate for the quarter was 43%, including the impact of discrete items. Adjusted EBITDA was $35.6 million, up approximately 33% from Q2 2025 due to the benefit of the duty-related item, increased sales, including Destaro, improved overall gross margins, and disciplined expense management. Not including the duty-related item, Q2 2026 adjusted EBITDA was $28.4 million, for a margin of 3.5%. Naturally, we are very pleased with the year over year increase in adjusted EBITDA in both Q1 and Q2.

Kelly Wall: Given the challenging demand environment and continued pressure on operating costs, consistent with prior quarters, we remain focused on disciplined expense management and identifying additional opportunities to improve efficiency. Net income for the quarter was $6.4 million, or $0.81 per diluted share. Adjusted net income was $9.1 million, or $1.15 per diluted share, up approximately 64%. Our effective income tax rate for the quarter was 43%, including the impact of discrete items. Adjusted EBITDA was $35.6 million, up approximately 33% from Q2 2025 due to the benefit of the duty-related item, increased sales, including Destaro, improved overall gross margins, and disciplined expense management. Not including the duty-related item, Q2 2026 adjusted EBITDA was $28.4 million, for a margin of 3.5%. Naturally, we are very pleased with the year over year increase in adjusted EBITDA in both Q1 and Q2.

Speaker #2: Net income for the quarter was $6.4 million. Or $81 per diluted share. Adjusted net income was $9.1 million. Or $1.15 per diluted share. Up approximately 64%.

Speaker #2: Our effective income tax rate for the quarter was 43%, including the impact of discrete items. Adjusted EBITDA was $35.6 million, up approximately 33% from Q2 of 2025 due to the benefit of the duty-related item, increased sales including DeStero, improved overall gross margins, and disciplined expense management.

Speaker #2: Not including the duty-related item, Q2 2026 adjusted EBITDA was $28.4 million, for a margin of 3.5%. Naturally, we are very pleased with the year-over-year increase in adjusted EBITDA in both the first and second quarters.

Speaker #2: Turning out of the Q2 results for specialty products. Net sales for specialty products were $564 million, in the second quarter. Up nearly 4% year-over-year.

Christopher Kelly Wall: Turning now to the Q2 results for Specialty Products. Net sales for Specialty Products were $564 million in Q2, up nearly 4% year over year. This increase was driven by Destaro sales and higher volumes in EWP and industrial, as well as increased pricing in nearly all product types, partially offset by volume pressures in millwork due to cheaper alternatives and aggressive local market pricing. Though we were able to improve pricing in Q2 on a year over year basis. Gross profit from Specialty Product sales was $113 million, up over 12% year over year. Specialty gross margin was 20%, up from last year's 18.5%. Excluding the $7.2 million duty-related item in Q2 2026, Specialty gross margin was still up 20 basis points from last year to 18.7%. Sequentially, Specialty gross margins improved 60 basis points when compared to Q1 2026.

Kelly Wall: Turning now to the Q2 results for Specialty Products. Net sales for Specialty Products were $564 million in Q2, up nearly 4% year over year. This increase was driven by Destaro sales and higher volumes in EWP and industrial, as well as increased pricing in nearly all product types, partially offset by volume pressures in millwork due to cheaper alternatives and aggressive local market pricing. Though we were able to improve pricing in Q2 on a year over year basis. Gross profit from Specialty Product sales was $113 million, up over 12% year over year. Specialty gross margin was 20%, up from last year's 18.5%. Excluding the $7.2 million duty-related item in Q2 2026, Specialty gross margin was still up 20 basis points from last year to 18.7%. Sequentially, Specialty gross margins improved 60 basis points when compared to Q1 2026.

Speaker #2: This increase was driven by DeStero sales and higher volumes in EWP and industrial, as well as increased pricing in nearly all product types. Partially offset by volume pressures in millwork due to cheaper alternatives and aggressive local market pricing.

Speaker #2: Though we were able to improve pricing in Q2 on a year-over-year basis. Gross profit from specialty product sales was $113 million. Up over 12% year-over-year.

Speaker #2: Specialty gross margin was 20%, up from last year's 18.5%. Excluding the 7.2 million dollar duty-related item in Q2 of 2026, specialty gross margin was still up 20 basis points from last year, to 18.7%.

Speaker #2: Sequentially, specialty gross margins improved 60 basis points when compared to Q1 of 2026. In the current Q3, we expect specialty product gross margin to be in the range of 18 to 19 percent.

Christopher Kelly Wall: In the current Q3, we expect Specialty Product gross margin to be in the range of 18% to 19%, with daily sales volumes flat compared to Q2 2026, and higher than Q3 2025. Now, moving on to Structural Products. Structural Products had a strong quarter. Net sales were $250 million for Structural Products in Q2, up nearly 6% compared to the prior year period. This increase was primarily due to higher lumber pricing and volumes when compared to last year, offsetting volume pressures in panels. Gross profit from Structural Products was $27 million, an increase of 40% year over year, and structural gross margin was 10.9%, up from 8.2% in the same period last year. Sequentially, structural gross margin was the same as Q1 2026.

Kelly Wall: In the current Q3, we expect Specialty Product gross margin to be in the range of 18% to 19%, with daily sales volumes flat compared to Q2 2026, and higher than Q3 2025. Now, moving on to Structural Products. Structural Products had a strong quarter. Net sales were $250 million for Structural Products in Q2, up nearly 6% compared to the prior year period. This increase was primarily due to higher lumber pricing and volumes when compared to last year, offsetting volume pressures in panels. Gross profit from Structural Products was $27 million, an increase of 40% year over year, and structural gross margin was 10.9%, up from 8.2% in the same period last year. Sequentially, structural gross margin was the same as Q1 2026.

Speaker #2: With daily sales volumes flat compared to the Q2 of 2026, and higher than the Q3 of 2025. Now moving on to structural products. Structural products had a strong quarter.

Speaker #2: Net sales were $250 million for structural products in the Q2. Up nearly 6% compared to the prior year period. This increase was primarily due to higher lumber pricing and volumes when compared to last year, offsetting volume pressures in panels.

Speaker #2: Gross profit from structural products was $27 million, an increase of 40% year-over-year, and structural gross margin was 10.9%, up from 8.2% in the same period last year.

Speaker #2: Sequentially, structural gross margin was the same as Q1 2026. We expect Q3 structural product gross margin to be in the range of 8.5 to 9.5%, with daily volumes to be higher than the Q2 of 2026, and also higher than the Q3 of 2025.

Christopher Kelly Wall: We expect Q3 Structural Product gross margin to be in the range of 8.5% to 9.5%, with daily volumes to be higher than Q2 2026, and also higher than Q3 2025. Now turning to our balance sheet. Our liquidity continues to be very strong. At the end of the quarter, cash and cash equivalents were $318 million, roughly in line with Q1 2026. When considering our cash on hand and undrawn revolver capacity of $337 million, available liquidity was approximately $655 million at the end of the quarter. Total debt, excluding our real property financing leases, was $377 million, and net debt was $58 million. Our net leverage ratio was 0.6x trailing four quarter adjusted EBITDA, and we have no material outstanding debt maturities until 2029.

Kelly Wall: We expect Q3 Structural Product gross margin to be in the range of 8.5% to 9.5%, with daily volumes to be higher than Q2 2026, and also higher than Q3 2025. Now turning to our balance sheet. Our liquidity continues to be very strong. At the end of the quarter, cash and cash equivalents were $318 million, roughly in line with Q1 2026. When considering our cash on hand and undrawn revolver capacity of $337 million, available liquidity was approximately $655 million at the end of the quarter. Total debt, excluding our real property financing leases, was $377 million, and net debt was $58 million. Our net leverage ratio was 0.6x trailing four quarter adjusted EBITDA, and we have no material outstanding debt maturities until 2029.

Speaker #2: Now turning to our balance sheet. Our liquidity continues to be very strong. At the end of the quarter, cash and cash equivalents were $318 million, roughly in line with Q1 of 2026.

Speaker #2: When considering our cash on hand and undrawn revolver capacity of $337 million, available liquidity was approximately $655 million, at the end of the quarter.

Speaker #2: Total debt, excluding our real property financing leases, was $377 million, and net debt was $58 million. Our net leverage ratio was 0.6 times trailing Q4 adjusted EBITDA.

Speaker #2: And we have no material outstanding debt maturities until 2029. Additionally, given the strength of our balance sheet and continued strong liquidity, we remain well-positioned to support our strategic initiatives.

Christopher Kelly Wall: Additionally, given the strength of our balance sheet and continued strong liquidity, we remain well-positioned to support our strategic initiatives. These strategic initiatives include: continued growth with our large national customers and in the multifamily channel, with this focus also benefiting our traditional regional customers; demand pull-through efforts to drive strategic product sales that benefit our customers; continued specialty product expansion with key suppliers, Trex being a great example; our business and digital transformation efforts; and other organic and inorganic growth initiatives. Now moving on to working capital and free cash flow. During Q2, we had operating cash flow of $11 million and free cash flow of $9 million. Both a significant improvement over Q2 2025, primarily due to higher adjusted EBITDA and more effective inventory management. Turning now to capital allocation.

Kelly Wall: Additionally, given the strength of our balance sheet and continued strong liquidity, we remain well-positioned to support our strategic initiatives. These strategic initiatives include: continued growth with our large national customers and in the multifamily channel, with this focus also benefiting our traditional regional customers; demand pull-through efforts to drive strategic product sales that benefit our customers; continued specialty product expansion with key suppliers, Trex being a great example; our business and digital transformation efforts; and other organic and inorganic growth initiatives. Now moving on to working capital and free cash flow. During Q2, we had operating cash flow of $11 million and free cash flow of $9 million. Both a significant improvement over Q2 2025, primarily due to higher adjusted EBITDA and more effective inventory management. Turning now to capital allocation.

Speaker #2: These strategic initiatives include: continued growth with our large national customers and in the multifamily channel, with this focus also benefiting our traditional regional customers.

Speaker #2: Demand pull-through efforts to drive strategic product sales that benefit our customers, continued specialty product expansion with key suppliers, TREX being a great example, our business and digital transformation efforts, and other organic and inorganic growth initiatives.

Speaker #2: Now moving on to working capital and free cash flow. During the Q2, we had operating cash flow of $11 million, and free cash flow of $9 million.

Speaker #2: Both a significant improvement over the Q2 of 2025, primarily due to higher adjusted EBITDA and more effective inventory management. Turning now to capital allocation.

Speaker #2: During the quarter, we incurred $2.8 million of capex, primarily related to investments in our facilities, technology, and fleet. For the second half of 2026, we expect capex will be higher than the prior year as we continue to invest in our business to address facility maintenance and improvements, as well as drive our channel and support our product strategies and business and digital transformation initiatives.

Christopher Kelly Wall: During the quarter, we incurred $2.8 million of CapEx, primarily related to investments in our facilities, technology and fleet. For H2 2026, we expect CapEx will be higher than the prior year as we continue to invest in our business to address facility maintenance and improvements, as well as drive our channel and support our product strategies and business and digital transformation initiatives. During Q2, we repurchased $2 million of our common shares, and as of quarter end, we have a total of $54 million remaining under our share repurchase authorizations. Our guiding principles for capital allocation remain consistent with prior quarters.

Kelly Wall: During the quarter, we incurred $2.8 million of CapEx, primarily related to investments in our facilities, technology and fleet. For H2 2026, we expect CapEx will be higher than the prior year as we continue to invest in our business to address facility maintenance and improvements, as well as drive our channel and support our product strategies and business and digital transformation initiatives. During Q2, we repurchased $2 million of our common shares, and as of quarter end, we have a total of $54 million remaining under our share repurchase authorizations. Our guiding principles for capital allocation remain consistent with prior quarters.

Speaker #2: Also, during the Q2, we repurchased $2 million of our common shares, and as of Q2 end, we have a total of $54 million remaining under our share repurchase authorizations.

Speaker #2: Our guiding principles for capital allocation remain consistent with prior quarters. We intend to maintain a strong balance sheet, which enables us to invest in our business through economic cycles, expand our geographic footprint, pursue a disciplined inorganic growth strategy as demonstrated by our acquisition of DeStero.

Christopher Kelly Wall: We intend to maintain a strong balance sheet, which enables us to invest in our business through economic cycles, expand our geographic footprint, pursue a disciplined inorganic growth strategy as demonstrated by our acquisition of Destaro, and opportunistically return capital to shareholders through share repurchases. We also plan to maintain a long-term net leverage ratio of two times or less. Overall, we are pleased with our strong Q2 results, especially given the challenging market backdrop. We were particularly pleased to see an increase in net sales, earnings, and free cash flow year-over-year. That said, we remain measured in our expectations for the balance of 2026 as housing conditions are expected to remain soft. Operator, we will now take questions.

Kelly Wall: We intend to maintain a strong balance sheet, which enables us to invest in our business through economic cycles, expand our geographic footprint, pursue a disciplined inorganic growth strategy as demonstrated by our acquisition of Destaro, and opportunistically return capital to shareholders through share repurchases. We also plan to maintain a long-term net leverage ratio of two times or less. Overall, we are pleased with our strong Q2 results, especially given the challenging market backdrop. We were particularly pleased to see an increase in net sales, earnings, and free cash flow year-over-year. That said, we remain measured in our expectations for the balance of 2026 as housing conditions are expected to remain soft. Operator, we will now take questions.

Speaker #2: And opportunistically return capital to shareholders through share repurchases. We also plan to maintain a long-term net leverage ratio of 2 times or less. Overall, we are pleased with our strong Q2 results.

Speaker #2: Especially given the challenging market backdrop. We were particularly pleased to see an increase in net sales, earnings, and free cash flow year-over-year. That said, we remain measured in our expectations for the balance of 2026 as housing conditions are expected to remain soft.

Speaker #2: Operator, we will now take questions.

Speaker #1: At this time, I would like to remind everyone in order to ask a question, press start, then the number 1 on your telephone keypad.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Reuben Garner with The Benchmark Company. Your line is now open. Please go ahead.

Speaker #1: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Ryuben Garner with the benchmark company.

Speaker #1: Your line is now open. Please go ahead.

Speaker #3: Thanks. Good morning, everyone, and congrats on the strong results, guys. Thank you.

Reuben Garner: Thanks. Good morning, everyone, congrats on the strong results, guys.

Christopher Kelly Wall: Thank you.

Kelly Wall: Thank you.

Speaker #4: Maybe to start the TREX announcement, last month or a couple weeks ago, any way to frame up the size of your decking business kind of before this and where you think that this could go now that you have access to, obviously, the leader in the space?

Reuben Garner: Maybe to start, the Trex announcement last month or a couple weeks ago, any way to frame up the size of your decking business before this and where you think that this could go now that you have access to obviously the leader in the space?

Speaker #3: Yeah, so appreciate the question. It's too early to say, to frame up. We've never talked numbers about any given category, other than to say our outdoor living products category is a key strategic specialty growth area for us.

Christopher Kelly Wall: Yeah. Appreciate the question.

Shyam Reddy: Yeah. Appreciate the question.

Shyam Reddy: It's too early to say, to frame up. We've never talked numbers about any given category other than to say our outdoor living products category is a key strategic specialty growth area for us. I would say that the Trex opportunity, it being the number one branded decking product out there with significant share, gives us a much more sizable opportunity than we've had before. With respect to the 11 markets, those markets are great markets for us. They align well with our distribution footprint, given the channel strategy, we believe we can drive outpaced growth for Trex in those markets and across our entire consolidated outdoor living products category. One thing I want to note is we are a brand new distribution partner for Trex.

Speaker #3: I would say that the TREX opportunity at being the number 1 branded decking product out there with significant share gives us a much more sizable opportunity than we've had before.

Speaker #3: And with respect to the 11 markets, those markets are great markets for us. They align well with our distribution footprint. And given the channel strategy, we believe we can drive outpaced growth for TREX in those markets and across our entire consolidated outdoor living products category.

Speaker #3: The one thing I want to note is we are a brand new distribution partner for TREX. The announcement was made not 3 or 4 weeks ago or 3 weeks ago, and we are prepared to start loading product in this month, which I think is an incredibly quick turnaround time for a two-step distribution partner.

Shyam Reddy: The announcement was made not three or four weeks ago, or three weeks ago, we are prepared to start loading product in this month, which I think is an incredibly quick turnaround time for a two-step distribution partner. More importantly, validates the strength of our operational excellence initiatives and our processes for honestly being the best commercialization partner for any given vendor in our space.

Speaker #3: And more importantly, validates the strength of our operational excellence initiatives and our processes for honestly being the best commercialization partner for any given vendor in our space.

Speaker #4: That's great. And then the gross margin performance very impressive. And encouraging in the environment. I guess, can you just walk through how you're handling this?

Reuben Garner: That's great. The gross margin performance, very impressive and encouraging in the environment. I guess, can you just walk through how you're handling this? You mentioned 60 vendor increases. There's obviously been transportation and energy costs rising. What has allowed you guys specifically to kind of work through all that? Is it pricing action surcharges? Are there costs that you have taken out that have helped offset this? Just walk through what's allowed you to perform that way.

Speaker #4: You mentioned 60 vendor increases. There's obviously been transportation and energy costs rising. What has allowed. Or you guys specifically to kind of work through all that?

Speaker #4: Are you is it pricing actions, surcharges? Are there costs that you have taken out that have helped offset this? Just walk through kind of what's allowed you to perform that way.

Speaker #3: Yeah. So let me start with operational excellence. Which is driven by our centers of excellence in Atlanta, with support out in the field as we have for example, regional directors of operations, in the field to support the branches around basically landed cost excellence combined with people in Atlanta who do the same thing.

Shyam Reddy: Yeah. Let me start with operational excellence, which is driven by our centers of excellence in Atlanta, with support out in the field as we have, for example, regional directors of operations in the field who support the branches around basically landed cost excellence combined with people in Atlanta who do the same thing. I would say at a high level, it has to do with managing the inflationary cost impact through strategic pricing initiatives, which is both in the context of price increases and surcharges. We take a bespoke approach. In other words, we have proactively worked with our customers to see what makes sense for them, it comes down to operational execution or speed of execution, which we have a very disciplined approach to doing so quickly in the field. That's on the cost side from an inflation standpoint.

Speaker #3: So I would say at a high level, it has to do with managing our the inflationary cost impact through strategic pricing initiatives, which is both in the context of price increases and surcharges.

Speaker #3: We take a bespoke approach. In other words, we have proactively worked with our customers to see what makes sense for them, and then it comes down to operational execution or speed of execution, for which we have a very disciplined approach to doing so quickly in the field.

Speaker #3: So that's on the cost side, from a inflation standpoint. From a supplier perspective, that comes down to execution as well. We work very closely with our suppliers to make sure we're fully aware of the price increase as well in advance, and we collaborate or we work with our customers in order to execute as quickly as possible to push those price increases through.

Shyam Reddy: From a supplier perspective, that comes down to execution as well. We work very closely with our suppliers to make sure we're fully aware of the price increases well in advance, we collaborate or we work with our customers in order to execute as quickly as possible to push those price increases through. As you can imagine with 60-plus distribution centers, multiple MSAs that we operate in that cover different kind of local market environments, that the seamless execution by having people work together efficiently and effectively make for a good operating model when passing cost increases through. Look, at the end of the day, Reuben, the most important thing is you have to be able to sell value, right? You can't just push cost increases through outside of supplier increases in particular, which hit the whole market, including our competitors.

Speaker #3: As you can imagine, with 60-plus distribution centers, multiple MSAs that we operate in that cover different kind of local market environments, that the seamless execution by having people work together efficiently and effectively make for a good operating model when passing cost increases through.

Speaker #3: But look, at the end of the day. Ruben, the most important thing is you have to be able to sell value, right? You can't just push cost increases through.

Speaker #3: Outside of supplier increases in particular, which hit the whole market, including our competitors, but with respect to the other cost increases—without having a value-added service proposition that people are willing to pay for in light of the inflationary pressures they're all facing.

Shyam Reddy: With respect to the other cost increases, without having a value-added service proposition that people are willing to pay for in light of the inflationary pressures they're all facing. Suffice it to say, if you look at the landscape out there, I would posit that we are able to price effectively because of the value we provide, which is allowing us to grow and drive margins in an otherwise challenging market, not just from a macro standpoint, but also from a declining housing start perspective as well.

Speaker #3: So, suffice it to say, if you look at the landscape out there, I would posit that we are able to push these—we are able to price effectively—because of the value we provide, which is allowing us to grow and drive margins in an otherwise challenging market, not just from a macro standpoint, but also from a declining housing start perspective as well.

Speaker #2: Yeah. The other component there is what we've seen on the structural side, right? At a 10.9% gross margin in the quarter, that's a materially from prior periods.

Christopher Kelly Wall: The other component there is what we've seen on the structural side, right? At a 10.9% gross margin in the quarter, that's up materially from prior periods. As we talked about in the Q1 call, we've seen an increase in market pricing for both lumber and panels that we've benefited from quite well as not only are we pricing effectively there, but we're managing our inventory so that we have supply available in the market to meet our customers' demands there as they're coming to us for more volumes. Just to kind of reiterate to Shyam's point, our efforts on the business and digital transformation front have been a key part of this, specifically our transportation management system that we put in place, which is helping us manage our freight cost in a significantly higher fuel and third-party freight cost environment.

Kelly Wall: The other component there is what we've seen on the structural side, right? At a 10.9% gross margin in the quarter, that's up materially from prior periods. As we talked about in the Q1 call, we've seen an increase in market pricing for both lumber and panels that we've benefited from quite well as not only are we pricing effectively there, but we're managing our inventory so that we have supply available in the market to meet our customers' demands there as they're coming to us for more volumes. Just to kind of reiterate to Shyam's point, our efforts on the business and digital transformation front have been a key part of this, specifically our transportation management system that we put in place, which is helping us manage our freight cost in a significantly higher fuel and third-party freight cost environment.

Speaker #2: And as we talked about in the first quarter call, we've seen an increase in that market pricing for both lumber and panels that we've benefited from quite well as not only are we pricing effectively there, but we're managing our inventory so that we have supply available in the market to meet our customers' demands there as they're coming to us for more volumes.

Speaker #2: And then again, just to kind of reiterate, Shyam's point, right? Our efforts on the business and digital transformation front have been a key part of this.

Speaker #2: Specifically, our transportation management system that we put in place which is helping us manage our freight cost in a significantly higher fuel and third-party freight cost environment.

Speaker #2: And then also our pricing initiatives where we're through the use of data and better tools, we're better able to assist our regions and branches in pricing more effectively and more quickly, which is allowing us to pass through these vendor cost increases as well as price the value-add that we're bringing to the market effectively.

Christopher Kelly Wall: Also our pricing initiatives where through the use of data and better tools, we're better able to assist our regions and branches in pricing more effectively and more quickly, which is allowing us to pass through these vendor cost increases as well as price the value add that we're bringing to the market effectively.

Kelly Wall: Also our pricing initiatives where through the use of data and better tools, we're better able to assist our regions and branches in pricing more effectively and more quickly, which is allowing us to pass through these vendor cost increases as well as price the value add that we're bringing to the market effectively.

Speaker #4: Great. And then last one for me, I think the press release said daily sales volumes higher year over year, also higher sequentially just to clarify, is that I mean, is it as simple as I would assume there's no reason pricing is lower in the third quarter than the second?

Reuben Garner: Great. Last one for me. I think the press release said daily sales volumes higher year-over-year, also higher sequentially. Just to clarify, is it as simple as I would assume there's no reason pricing is lower in Q3 than Q2, so revenue is expected to be higher in Q3 versus Q2, and if so, that's a pretty reasonable acceleration in year-over-year revenue growth. Can you just walk through what gives you the confidence? A lot of companies, especially with exposure to new housing construction, are a little more modest in H2. Just talk about what's driving that for you guys.

Speaker #4: So revenue is expected to be higher in Q3 versus the second quarter. And if so, that's a pretty reasonable acceleration in year over year revenue growth.

Speaker #4: Can you just walk through kind of what gives you the confidence? A lot of companies in especially with exposure to new housing construction are kind of a little more modest in the back half.

Speaker #4: So just talk about what's driving that for you guys.

Speaker #3: Yeah. What we're seeing is total revenue will be down from sorry, would be up. You're right. From Q2 to Q3. And again, I think it's just as we continue to execute our strategies, we're driving volume growth certainly relative to the overall market, but also back on the pricing front as we continue to supply more effectively that's benefiting us as well.

Christopher Kelly Wall: Yeah. What we're seeing is total revenue would be up, you're right, from Q2 to Q3. I think it's just as we continue to execute our strategies, we're driving volume growth certainly relative to the overall market, but also back on the pricing front as we continue to price more effectively. That's benefiting us as well. On the structural side, you can see in our press release, expecting margins to come back down in H2 of the year to something that's more aligned with traditional levels. They have been elevated in the first part of the quarter, which is also going to help with that as well as we move forward.

Kelly Wall: Yeah. What we're seeing is total revenue would be up, you're right, from Q2 to Q3. I think it's just as we continue to execute our strategies, we're driving volume growth certainly relative to the overall market, but also back on the pricing front as we continue to price more effectively. That's benefiting us as well. On the structural side, you can see in our press release, expecting margins to come back down in H2 of the year to something that's more aligned with traditional levels. They have been elevated in the first part of the quarter, which is also going to help with that as well as we move forward.

Speaker #3: And then on the structural side, I think we are you can see in our press release, expecting margins to kind of come back down in the back half of the year to something that's more aligned with traditional levels.

Speaker #3: But they have been elevated in the first part of the quarter, which is also going to help with that as well as move forward.

Speaker #4: Great, thanks. Congrats again on the results and the news with Trex, and good luck going forward, guys.

Reuben Garner: Great. Thanks. Congrats again on the results and the news with Trex and good luck on Forward, guys.

Speaker #3: Thank you.

Shyam Reddy: Thank you.

Speaker #2: Thanks.

Christopher Kelly Wall: Thanks.

Kelly Wall: Thanks.

Speaker #1: Your next question comes from the line of Jeffrey Stevenson with Loop Capital. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Jeffrey Stevenson with Loop Capital. Your line is now open. Please go ahead.

Speaker #5: Hi. Thanks for taking my questions today. I was wondering if you could walk me through how especially product volumes trended throughout the quarter and what product categories in particular came in better than worse than anticipated.

Jeffrey Stevenson: Hi, thanks for taking my questions today. I was wondering if you could walk me through how specialty products volumes trended throughout the quarter, and what product categories in particular came in better than worse than anticipated. Following up on Reuben's question, both average daily sales volumes expected to be up both year-over-year and sequentially. Is this really driven by your share gain initiatives helping you drive above-market growth given continued residential demand headwinds?

Speaker #5: Then following up on Ruben's question, both average daily sales volumes expected to be up both year over year and sequentially. Is this really driven by your share gain initiatives?

Speaker #5: Helping you drive above market growth given continued residential demand headwinds?

Speaker #3: Yeah. Let me take the first part of the question. So from a category standpoint, we saw pressure in millwork volumes, which isn't surprising given TEPID R&R activity as well as panels, which has been a challenging market just given oversupply, if you will.

Shyam Reddy: Yeah, let me take the first part of the question. From a category standpoint, we saw pressure in millwork volumes, which isn't surprising given tepid R&R activity, as well as panels, which has been a challenging market, just given oversupply, if you will. For the most part, those were two of our more challenged categories. When I think about our share gain efforts, we are focused on multi-family. We are focused on driving national accounts business at scale, which ends up benefiting our entire customer base. Last but not least, we are executing or implementing strategic builder pull-through programs in alignment with key channel partners that are driving sales in very specific specialty product categories. All of the above is what leads to the share gain in an otherwise down or challenging market.

Speaker #3: But for the most part, those were two of our more challenged categories. When I think about when I think about our share gain efforts, we are focused on multifamily.

Speaker #3: We are focused on driving national accounts business at scale, which ends up benefiting our entire customer base. And last but not least, we are executing or implementing strategic builder pull-through programs in alignment with key channel partners that are driving sales in very specific specialty product categories.

Speaker #3: All of the above is what leads to the share gain in an otherwise down or challenging market. So I whether the market is great or terrible, I'm confident that our teams can execute successfully on getting more and more of the pie because of the strategic approach we're taking to helping our customers grow their business and also being the best commercialization partner for our suppliers.

Shyam Reddy: Whether the market is great or terrible, I'm confident that our teams can execute successfully on getting more and more of the pie because of the strategic approach we're taking to helping our customers grow their business and also being the best commercialization partner for our suppliers. If you take a look at the evidence that supports that, we've talked about growing from 0 to 20 plus markets with LP in 18 to 20 months. We've gone national with Georgia-Pacific as it relates to key product lines that support the multi-family business. We've expanded substantially with Huber in multiple markets in a very short period of time. We launched with TruExterior in 14 markets at once, Trex in 11 markets.

Speaker #3: And if you take a look at the evidence that supports that, we've talked about growing from 0 to 20-plus markets with LP and 18 to 20 months.

Speaker #3: We've gone national with Georgia Pacific as it relates to key product lines that support the multifamily business. We've expanded substantially with Huber in multiple markets in a very short period of time.

Speaker #3: We launched with True Exterior in 14 markets at once. Trex in 11 markets. Generally speaking, if you look at historic trends, it's rare that you can expand and double-digit markets all at once with key suppliers or in a relatively short time.

Shyam Reddy: Generally speaking, if you look at historic trends, it's rare that you can expand in double-digit markets all at once with key suppliers or in a relatively short time. I would say that our channel strategy is what's driving that accelerated geographic and SKU expansion with respect to key product lines from our suppliers. At the end of the day, we are focused on winning at the local market and regional levels and continuing to gain share because of the focus. Then, of course, the operational excellence initiatives, the business excellence initiatives on value-add services and our transportation management system, the alignment, the e-commerce and AI are all serving as amplification or accelerants to the general business efforts that are underway.

Speaker #3: And I would say that our commercial, our channel strategy, is what's driving that accelerated geographic and SKU expansion with respect to key product lines and our suppliers.

Speaker #3: So at the end of the day, we are focused on winning at the local market and regional levels and continuing to gain share because of the focus.

Speaker #3: And then, of course, the operational excellence initiatives, the business excellence initiatives on value-add services and our transportation management system, the alignment, the e-commerce and AI are all serving as amplification or accelerants to the general business efforts that are underway.

Speaker #2: Yeah. And Ruben, more specifically about what we're seeing in kind of the current quarter, or sorry, Jeff, what we're seeing here in the current quarter, we are year over year, volumes are up for both specialty and structural, kind of low single digits.

Christopher Kelly Wall: Yeah. Reuben, more specifically about what we're seeing in the current quarter. Sorry, Jeff, what we're seeing here in the current quarter. Year-over-year, volumes are up for both specialty and structural in low single digits. On the pricing front, same thing, right? We're seeing specialty pricing up low single digits, structural's actually up in the mid-teens level. Sequentially, we're continuing to expect overall volumes. While they were down slightly at the beginning of the quarter, we're seeing that trend reverse out, and we expect that the overall trends will be slightly positive sequentially from Q3 to Q4. As a reminder, typically from Q2 to Q3. As a reminder, typically our Q3 is higher, right, seasonally than Q2, and we don't have any reason to expect that that would change.

Kelly Wall: Yeah. Reuben, more specifically about what we're seeing in the current quarter. Sorry, Jeff, what we're seeing here in the current quarter. Year-over-year, volumes are up for both specialty and structural in low single digits. On the pricing front, same thing, right? We're seeing specialty pricing up low single digits, structural's actually up in the mid-teens level. Sequentially, we're continuing to expect overall volumes. While they were down slightly at the beginning of the quarter, we're seeing that trend reverse out, and we expect that the overall trends will be slightly positive sequentially from Q3 to Q4. As a reminder, typically from Q2 to Q3. As a reminder, typically our Q3 is higher, right, seasonally than Q2, and we don't have any reason to expect that that would change.

Speaker #2: And on the pricing front, same thing, right? We're seeing especially pricing up low single digits. And in structurals, actually up kind of in the mid-teens level.

Speaker #2: And then sequentially, we're continuing to expect overall volumes while they are down slightly at the beginning of the quarter, we're seeing that trend reverse out, and we expect that the overall trends will be slightly positive.

Speaker #2: Sequentially, from Q3 to Q4. And as a reminder, typically, we have I'm sorry, from Q2 to Q3, and then as a reminder, typically, our Q3 quarter is higher, right?

Speaker #2: Seasonally, than Q2. And we don't have any reason to expect that that would change. And as I look at some of the specific, kind of, categories on the volume front, all of our categories are flat to up.

Christopher Kelly Wall: As I look at some of the specific kind of categories on the volume front, all of our categories are up, flat to up. Some of them is kind of high single digits in certain key categories, again, across both specialty and structural as we start the Q3 here.

Kelly Wall: As I look at some of the specific kind of categories on the volume front, all of our categories are up, flat to up. Some of them is kind of high single digits in certain key categories, again, across both specialty and structural as we start the Q3 here.

Speaker #2: Some of them kind of high single digits. In certain key categories, again, across both specialty and structural, as we start the third quarter here.

Speaker #5: Oh, thanks for all that. In a detail, very helpful. So I appreciate that. And one category where you've seen deflation pressure last kind of one to two years has been EWP and no wonder if you could update on the competitive environment there and your competitor talk to kind of third-quarter price increases.

Jeffrey Stevenson: Oh, thanks for all the details. Very helpful. I appreciate that. One category where you've seen deflation pressure over the last 1 to 2 years has been EWP, and I wondered if you could update on the competitive environment there and your competitor talked to kind of Q3 price increases. Just wondered, should we expect pricing to stabilize and inflect higher in that category?

Speaker #5: Just wondered, should we expect pricing to stabilize and inflect higher in that category?

Speaker #3: Yeah. So the competitive landscape hasn't changed per se, but where I would emphasize kind of our strength is on margin and volume growth due to the builder pull-through programs that we're we've established with key channel partners to drive growth.

Shyam Reddy: Yeah. The competitive landscape hasn't changed per se, but where I would emphasize our strength is on margin and volume growth due to the builder pull-through programs that we've established with key channel partners to drive growth and participate more opportunistically across the country. That's been a win for us. I would say that the deflationary impact, if you compare us to others out there, has had less impact on us, and I would say that it's because of the value-add services we're providing that justify the price maintenance, by and large, relative to maybe others out there. Look, at the end of the day, it's a very competitive environment. There are products coming in from overseas, for example, LVL, Euro LVL, that puts pricing pressure on locally market-produced EWP.

Speaker #3: And participate more participate more opportunistically across the country. So that's been a win for us. I would say that the deflationary impact, if you compare us to others out there, has had less impact on us.

Speaker #3: And I would say that it's because of the value-add services we're providing that justify the price maintenance by and large relative to maybe others out there.

Speaker #3: So look, at the end of the day, it's a very competitive environment. There are products coming in from overseas. For example, LVL, Euro LVL, that puts pricing pressure on local market locally market-produced EWP.

Speaker #3: But at the same time, because of our value-add services, creative pricing programs, channel partner relationships that are driving honestly profitable sales growth for end builders, is ultimately enabling us to quite frankly, not only gain share, but also maintain margins and not be adversely impacted as much as you might expect with EWP pricing that others may be experiencing.

Shyam Reddy: At the same time, because of our value-add services, creative pricing programs, channel partner relationships that are driving honestly profitable sales growth for end builders is ultimately enabling us to, quite frankly, not only gain share, but also maintain margins and not be adversely impacted as much as you might expect with EWP pricing that others may be experiencing.

Speaker #5: No, that's helpful, Shyam. And then, last one for me—just, SG&A stepped up sequentially due to the Destera acquisition and higher fuel and third-party freight costs, among others.

Jeffrey Stevenson: No, that's helpful, Shyam. Last one from me, just SG&A stepped up sequentially due to the Destaro acquisition and higher fuel and third-party freight costs, among others. Should we expect this to be a run rate moving forward or just kind of any hand-holding on kind of SG&A in the back half of the year would be helpful.

Speaker #5: And should we expect this to be a run rate moving forward or just kind of any hand-holding on kind of SG&A in the back half of the year would be helpful.

Speaker #3: Yeah. I think on the SG&A front, last quarter, we mentioned that we'd expect each quarter to be kind of in that 100 to 105 million dollars with the middle two quarters being higher and then Q1 and Q2 4 being lower.

Christopher Kelly Wall: Yeah. I think, on the SG&A front, last quarter we mentioned that we'd expect each quarter to be kind of in that $100 to $105 million, with the middle two quarters being higher, and then Q1 and Q4 being lower. We came in at $107 million in Q2. Again, higher fuel cost, freight cost, higher employee cost as well relative to our original plan, tied to our overperformance and our compensation structure internally are lending to that, as well as higher healthcare costs, which is a trend that we're continuing to see. As we kind of carry that forward into the back half of the year, what I would tell you, Jeff, is that we'd expect to average about $105 million in SG&A for both quarters, with Q3 being slightly higher than Q4, which is the typical trend you see seasonally.

Kelly Wall: Yeah. I think, on the SG&A front, last quarter we mentioned that we'd expect each quarter to be kind of in that $100 to $105 million, with the middle two quarters being higher, and then Q1 and Q4 being lower. We came in at $107 million in Q2. Again, higher fuel cost, freight cost, higher employee cost as well relative to our original plan, tied to our overperformance and our compensation structure internally are lending to that, as well as higher healthcare costs, which is a trend that we're continuing to see. As we kind of carry that forward into the back half of the year, what I would tell you, Jeff, is that we'd expect to average about $105 million in SG&A for both quarters, with Q3 being slightly higher than Q4, which is the typical trend you see seasonally.

Speaker #3: We came in at 107 million dollars in Q2, again, higher fuel costs, freight costs, higher employee costs as well relative to our original plan tied to our overperformance and our compensation structure internally.

Speaker #3: Our lending that as well as higher healthcare costs, which is a trend that we're continuing to see. So as we kind of carry that forward into the back half of the year, what I would tell you, Jeff, is that we'd expect to average about 105 million in SG&A for both quarters, with Q3 being slightly higher than Q4, which is the typical trend you see seasonal.

Speaker #3: Yeah. And I'd also like to point out, we don't talk about we don't give formal breakdowns per se, but when we think about volumes, you have out-of-warehouse and you have direct.

Shyam Reddy: Yeah, I'd also like to point out, we don't give formal breakdowns per se, but when we think about volumes, you have out of warehouse and you have direct, and then you have others that come out of reload. Again, due to our channel strategy and the efforts we've employed in order to drive growth and gain share, all of the above have increased our out-of-warehouse volumes, which obviously drive up SG&A costs at the warehouse level. On the one hand, the SG&A costs are higher. There's just a commensurate increase to the disproportionate growth out of warehouse with respect to volumes when compared to directs, which quite frankly, have been pressured as we continue to lean on our channel share gain. Very specific elements of the channel strategy.

Speaker #3: And then you have others that come out of reload. Again, due to our channel strategy and the efforts we've employed in order to drive growth and gain share, all of the above have increased our out-of-warehouse volumes, which obviously drive SG&A costs at their warehouse level.

Speaker #3: So on the one hand, the SG&A costs are higher. There's just a commensurate increase to the disproportionate growth out-of-warehouse with respect to volumes when compared to which to directs, which quite frankly, have been pressured as we continue to lean on our channel share gain very specific elements of the channel strategy.

Speaker #5: Great. Thank you.

Jeffrey Stevenson: Great. Thank you.

Speaker #1: Your last question comes from the line of Kurt Yinger with the DA Davidson. Your line is now open. Please go ahead.

Operator: Your last question comes from the line of Kurt Yinger with the D.A. Davidson & Co. Your line is now open. Please go ahead.

Speaker #4: Great, thanks. And good morning, everyone. You had mentioned a couple of examples—right?—of vendor relationships that you'd expanded pretty quickly. I'm just curious, in the context of trucks, what's kind of the timeline or progression that you would expect ramping up to a reasonably sized base of business, or what are your initial expectations for run-rate contributions?

Kurt Yinger: Great. Thanks, good morning, everyone.

Shyam Reddy: Good morning, Kurt.

Kurt Yinger: Shyam, you had mentioned a couple examples, right, of vendor relationships that you'd expanded pretty quickly. I'm just curious in the context of Trex, what's kind of the timeline or kind of progression that you would expect ramping up to a reasonably sized base of business or kind of initial expectations for run rate contributions?

Speaker #3: Yeah. So again, it's too early to talk about numbers. But I can tell you that given the sophisticated processes we've put in place around product launches, here at BlueLinx, we are moving very quickly with POs being issued.

Shyam Reddy: Yeah. Again, it's too early to talk about numbers. I can tell you that given the sophisticated processes we put in place around product launches here at BlueLinx, we are moving very quickly with POs being issued by the end of this week and product being loaded in this month, with sales and profit hitting the 2026 P&L in Q3, Q4. Ultimately, it's going to take time to ramp up as we go out and we convert business. Fortunately with Trex, it's an incredibly well-branded product that's sold in all these markets. Given how we execute, I'm confident we'll be able to not only execute quickly but convert quickly. It's really a 2027 impact, as it will take time for us to really get known in the marketplace.

Speaker #3: By the end of this week, and with product being loaded this month, and with sales and profit hitting the 26th P&L in Q3 and Q4.

Speaker #3: But ultimately, it's going to take time to ramp up as we go out and we convert business. We fortunately with trucks, it's an incredibly well-branded product that's sold in all these markets.

Speaker #3: And given the given how we execute, I'm confident we'll be able to not only execute quickly, but convert quickly. But it's really a 2027 impact as it will take time for us to really get known in the marketplace.

Speaker #3: Like I said, we're a new supplier. A new distribution partner for Trucks. And after some strong relationship building over the last year, we put our selves in a position to earn their trust and them make us a key partner of theirs.

Shyam Reddy: Like I said, we're a new supplier, a new distribution partner for Trex, after some strong relationship building over the last year, we put ourselves in a position to earn their trust and them make us a key partner of theirs. Like I said, I've said it over and over again, I believe in our team's ability to execute to a point where we're able to convince not only our long-term partners but our new partners that we are the best commercialization partner out there, thus be in a position to expand in new markets on a much faster clip than we may have been able to do a few years ago. I can't give you specifics yet because obviously we're only a few weeks in.

Speaker #3: And like I said, I've said it over and over again, I believe in our team's ability to execute to a point where we're able to convince not only our long-term partners, but our new partners that we are the best commercialization partner out there and thus be in a position to expand in new markets on a much faster clip than we may have been able to do a few years ago.

Speaker #3: But I can't give you specifics yet because we're obviously we're only a few weeks in. But I mean, again, we're issuing POs and loading product in very quickly, and we'll be on our road to on our road to a long-term partnership with Trucks, which I'm really excited about.

Shyam Reddy: Again, we're issuing POs and loading product in very quickly, and we'll be on our road to a long-term partnership with Trex, which I'm really excited about.

Speaker #4: Okay, that's helpful. But I mean, 2027 is probably when this becomes more of a conversation in terms of what's flowing through the P&L, at least.

Kurt Yinger: Okay, that's helpful. 2027 is probably-

Shyam Reddy: Yes

Kurt Yinger: when this becomes more of a conversation in terms of what's flowing through the P&L at least.

Speaker #3: That's right. I mean, just in the early days, right, we'll have a significant working capital investment, then we'll we have general views around turn days and obviously return on working capital.

Shyam Reddy: That's right. In the early days, we'll have a significant working capital investment, then we have general views around turn days and obviously return on working capital. Like I said, it's going to take time. There'll be some investments up front, look at 2027 as the real year of execution. Quite frankly, I think to Trex's credit, moving this early with their new distribution footprint is great because it gets us in place to not only hit the ground running this year, but be a partner to them before we start developing and negotiating programs with our customers heading into 2027. We've got a head start, and as a new partner, that's a great place to be.

Speaker #3: But like I said, I mean, it's going to take time. So there'll be some investments up front. But look at 2027 as the real year of execution.

Speaker #3: Quite frankly, I think it's that to Trucks' credit moving this early with their new distribution footprint is great because it gets us in place to not only hit the ground running this year, but be a partner to them before we start developing and negotiating programs with our customers heading into '27.

Speaker #3: So we've got a head start. And that's as a new partner, that's a great place to be.

Speaker #4: Yep. Agreed. Okay. And I apologize because this is probably going to be, maybe, an impossible question, but I'll ask it anyway. When you think about these larger vendors with kind of strict dual distribution models, is there a rule of thumb in terms of distributor A, distributor B, kind of general market share?

Kurt Yinger: Yep, agreed. Okay. I apologize because this is going to be probably maybe an impossible question, but I'll ask it anyways. When you think about these larger vendors with kind of strict dual distribution models, is there a rule of thumb in terms of distributor A, distributor B kind of general market share? Is it, I guess, really market dependent?

Speaker #4: Or is it, I guess, really market dependent?

Speaker #3: So it's all about local market execution, right? Our supplier partners aren't going to go with they're only going to go with distributors in markets who they believe can help grow their overall business, right?

Shyam Reddy: It's all about local market execution, right? Our supplier partners, they're only going to go with distributors in markets who they believe can help grow their overall business, who can take their full capacity across the entire country or where they're otherwise serving and make sure they have the right distribution partners to go execute on their sales growth strategies, quite frankly, because we're essentially an extension of their business. We provide the sales teams, the value-add services, the local market contacts in order to drive commercialization of their product. At the market level, it's really head-to-head competition with our competitors and where we compete there is around value-add services. We do, for example, take off services or innovative programs. For example, we are trying to go up and to the right as it relates to our structural specialty mix.

Speaker #3: Who can take their full capacity across the entire country or where they're otherwise serving. And make sure they have the right distribution partners to go execute on their sales growth strategies, quite frankly, because we're essentially an extension of their business.

Speaker #3: We provide the sales teams, the value-add services, the local market contacts. In order to drive commercialization of their product. At the market level, it's really head-to-head competition with our competitors and where we compete there is around value-add services, we do take for example, take-off services or innovative programs to mixed for example, we are trying to go up into the right as it relates to our structural specialty mix.

Speaker #3: We're shifting our specialty but again, as we try and serve the whole house needs of any given end user, vis-a-vis our customers and channel partners, having the structural and the specialty gives us the ability to sell into the whole house and ultimately provide a much better value proposition for our customers as they compete for business from their customers.

Shyam Reddy: We're shifting our specialty. Again, as we try and serve the whole house needs of any given end user vis-a-vis our customers and channel partners, having the structural and the specialty gives us the ability to sell into the whole house and ultimately provide a much better value proposition for our customers as they compete for business from their customers. Those are the kind of nuances at the local market level that give us the ability to win business. We provide, whether it's bundling of various products and having creative pricing around those bundled product offerings to help our suppliers compete against their competitors who might carry multiple product lines. That's how we win at the local market level. I don't think it's A, B, C, or D per se.

Speaker #3: And so those are the kind of nuances at the local market level that give us the ability to win business. We provide whether it's bundling of various products and having creative pricing around those bundled product offerings.

Speaker #3: To help our suppliers compete against their competitors who might carry multiple product lines. Right? That's how we win at the local market level. So I don't think it's A, B, C, or D per se.

Speaker #3: It's really they've got their partners and then we're out in the market competing on value and I think our results show that we're able to effectively compete on value maintain pricing, maintain margins, and while at the same time grow business in an otherwise tough market.

Shyam Reddy: It's really, they've got their partners, then we're out in the market competing on value, I think our results show that we're able to effectively compete on value, maintain pricing, maintain margins, and while at the same time grow business in an otherwise Tough market. Now look, our channel strategy, as I think about multifamily, as I think about leveraging the national accounts to drive a better value proposition across the country and ultimately every customer benefits, Trex being a good example, right? Because every customer in those 11 markets are going to benefit from that product offering as they do from the products we offer from LP or Huber and so on. That plus multifamily and obviously these builder pull-through programs, ideally, and again, these double-digit market launches and SKU expansion efforts show that our value to suppliers continues to get stronger and stronger.

Speaker #3: Now, look, our channel strategy—as I think about multifamily, as I think about leveraging the national accounts to drive a better value proposition across the country, and ultimately, every customer benefits. Trucks being a good example, right?

Speaker #3: Because every customer in those 11 markets are going to benefit from that product offering as they do from the products we offer, from LP or Huber and so on.

Speaker #3: So that plus multifamily and obviously these builder-pull-through programs ideally and again, these double-digit market launches and SKU expansion efforts show that our value to suppliers continues to get stronger and stronger and ultimately the goal would be to be able to carry our suppliers' products across the entire country.

Shyam Reddy: Ultimately, the goal would be to be able to carry our suppliers' products across the entire country, because that will most effectively support the channel strategy. We continue to make significant progress on that front.

Speaker #3: Because that will most effectively support the channel strategy. And we continue to make significant progress on that front.

Speaker #4: Okay. Okay. That's great, Keller. And I mean, maybe the last part answers this next question, but what are kind of the primary second-order effects with what I'll call it kind of upgrading the vendor base, right?

Kurt Yinger: Okay. That's great color. Maybe the last part answers this next question, but what are kind of the primary second order effects with what I'll call it, kind of upgrading the vendor base, right? Does that help you maybe attract another vendor in a different category that you've been pursuing or open the door to new kind of dealer partners, just beyond these wins in isolation? Can you just talk about what that means for the BlueLinx platform?

Speaker #4: I mean, does that help you maybe attract another vendor in a different category that you're been pursuing or open the door to new kind of dealer partners just beyond these wins in isolation?

Speaker #4: Can you just talk about kind of what that means for the BlueLinx platform?

Speaker #3: Yeah. The answer is yes, absolutely. It just validates not only our strategy, but it strengthens our value proposition via brand association talk to your brand association.

Shyam Reddy: Yeah. The answer is yes, absolutely. It validates not only our strategy, but it strengthens our value proposition via brand association, top-tier brand association. Then as you think about programs that are out there, I'm sorry. If you think about how big builders and other builders build, whether it's they're building 15 to 20 homes or they're building hundreds of homes, then if you look at multifamily, they have specs in place, right? So to the extent that we can drive high value add branded product offerings, whether it be with LP, Trex, Huber, Roseburg, and Georgia-Pacific and so on, what that does is people want to be with winners, right? Suppliers want to be with winners, and we're winning. It will continue. By the way, as we look at, for example, the TruExterior rollout with Royal Westlake, that's another example.

Speaker #3: And then as you think about as you think about programs that are out there I'm sorry. If you think about how big builders and other builders build, whether it's they're building 15 to 20 homes or they're building hundreds of homes and then if you think at multifamily, if you look at multifamily, they have specs in place.

Speaker #3: Right? And so to the extent that we can drive high value-add branded product offerings, whether it be with LP, Trucks, Huber, Roseberg, and Georgia Pacific and so on, what that does is it people want to be with winners.

Speaker #3: Right? Suppliers want to be with winners and we're winning. And it will continue and by the way, as we look at for example, the True Exterior rollout with Royal Westlake, that's another example.

Speaker #3: So these it's just wins but get more wins. And then they take us further down the road of serving the whole house needs, of our customers' customers.

Shyam Reddy: It's just wins beget more wins, then they take us further down their road of serving the whole house needs of our customers' customers. If we can do that and continue to do it well, obviously it will enable more greater dealer business and national accounts business, and lumberyard business and so on, at the local, regional, and national level.

Speaker #3: And if we can do that and continue to do it well, then obviously it will enable more greater dealer business and national accounts business, and lumber yard business, and so on.

Speaker #3: At the local regional and national level.

Speaker #4: Perfect. Okay. That makes sense. And just lastly, from an internal perspective, what type of investments or kind of human capital what are kind of the focus areas ahead of kind of that rollout, right?

Kurt Yinger: Perfect. Okay. That makes sense. Just lastly, from an internal perspective, what type of investments or human capital, what are the focus areas ahead of that rollout, right? Do you need to add specific salespeople, things like that? Is that something to be aware of from a spend perspective? Talk about that a little bit at a high level, if you could.

Speaker #4: Do you need to add specific salespeople, things like that? Is that something to be aware of from kind of a spend perspective? Just talk about that a little bit at a high level if you could.

Speaker #3: Yeah. So the answer is yes, but it also depends as you go down into each market. So there are markets where we have existing resources that can be leveraged.

Shyam Reddy: Yeah. The answer is yes, but it also depends as you go down into each market. There are markets where we have existing resources that can be leveraged. There are investments we will make, both CapEx and OpEx, as determined through our sophisticated product launch process that's being done in direct collaboration with Trex in order to ensure not only a smooth rollout, but to maximize the economic opportunity that this relationship will create for both of us. Quite frankly, what's great about it is they've had existing distribution relationships in those 11 markets that we can baseline against in order to set the mark from a growth perspective. The answer is, yeah, we will hire where it makes sense, outdoor living specialists who will be focused on the Trex product lines.

Speaker #3: There are investments we will make both capex and opex. As determined through our sophisticated product launch process. That's being done in direct collaboration with Trucks.

Speaker #3: In order to ensure not only a smooth rollout, but to maximize the economic opportunity that this relationship will create for both of us. And, quite frankly, what's great about it is they've had existing distribution relationships in those 11 markets that we can baseline against in order to kind of set the mark from a growth perspective.

Speaker #3: But the answer is, yeah, we will hire where it makes sense. Outdoor living specialists who will be focused on the Trucks product lines. We will also have we will make investments with our own teams as it relates to significant training to make sure they're up to speed on those product lines and collaboration with Trucks.

Shyam Reddy: We will make investments with our own teams as it relates to significant training to make sure they're up to speed on those product lines in collaboration with Trex. We will be sending dozens of people to the Trex headquarters in one of their mills very quickly to make sure we can hit the ground running and quite frankly, exceed their expectations as it relates to us. Yeah, there are all kinds of G&A expenses. From a headcount perspective, it will be very targeted and thoughtful and tied to the growth strategy on a market-by-market basis. We will also leverage the product management team and the category specialists we have in Atlanta, which is a shared resource, who will work directly with on-the-ground resources to accelerate sales being driven by not only the product managers, but our territory managers who have very strong customer relationships in the field.

Speaker #3: We'll be sending dozens of people to the Trucks headquarters in one of their mills very quickly to make sure we can hit the ground running and quite frankly, exceed their expectations as it relates to us.

Speaker #3: So yeah, there are all kinds of G&A expenses, but from a headcount perspective, it will be very targeted and thoughtful and tied to the growth strategy on a market-by-market basis.

Speaker #3: We'll also leverage the product management team and the category specialists we have in Atlanta, which is a shared resource. Who will work directly with on-the-ground resources to accelerate sales being driven by not only the product managers, but our territory managers who are who have very strong customer relationships in the field.

Speaker #4: Great. Okay. Appreciate all the colors. Thank you.

Kurt Yinger: Great. Okay. Appreciate all the color. Thank you.

Shyam Reddy: Sure. Thank you.

Speaker #2: Is that concludes? Sorry. Is that concludes our Q&A session? I will now turn the call back over to Tom Morabito. For closing remarks.

Operator: That concludes our Q&A session. I will now turn the call back over to Thomas Morabito for closing remarks.

Speaker #4: Thanks, Bella. Thank you again for joining us today. And we look forward to speaking with you in November as we share our third quarter 2026 results.

Thomas Morabito: Thanks, Bella. Thank you again for joining us today. We look forward to speaking with you in November as we share our Q3 2026 results.

Tom Morabito: Thanks, Bella. Thank you again for joining us today. We look forward to speaking with you in November as we share our Q3 2026 results.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Everyone, have a great day.

Q2 2026 BlueLinx Holdings Inc Earnings Call

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