Group 1: Federal Reserve and Interest Rates - The Federal Open Market Committee (FOMC) meeting on September 17 is expected to result in an interest rate cut, marking the first reduction since 2025 [1] - Analysts anticipate a modest trimming of rates due to concerns over unemployment figures, leading to market expectations for relief [1] Group 2: Impact on Homebuilding Industry - Financial services and real estate companies are the primary sectors linked to federal funds rate changes, with homebuilding and logistics firms also worth considering [2] - Builders FirstSource, a major supplier in homebuilding, has seen its shares remain flat year-to-date but has experienced steady growth in recent months [4] - The company faced a 5% year-over-year decline in net sales in the second quarter, missing analyst estimates, amid commodity deflation and a soft housing market [5] Group 3: Potential Benefits from Rate Cuts - Lower interest rates could stimulate the housing market by motivating homeowners to engage in renovation projects, thereby increasing demand for homebuilding goods [6] - PulteGroup, another prominent homebuilder, has seen its shares rise nearly 28% year-to-date, benefiting from a strong land position with about 250,000 lots under control [7][8] - PulteGroup's diversified offerings, including land ownership and mortgage services, position it well to capitalize on increased housing market activity [9] Group 4: Logistics Industry Outlook - GXO Logistics, a $6 billion logistics firm, has shown strong performance with a 19% year-to-date increase in shares and record revenue of $3.3 billion in the second quarter [11][12] - The company has achieved organic revenue growth of about 6% year-over-year, indicating resilience despite supply chain challenges [12] - Lower interest rates are expected to benefit GXO's finances and stimulate additional demand across its business segments [13]

Core Viewpoint - The current earnings season for U.S. consumer stocks has led to an unusual sell-off, despite strong earnings reports, indicating deep-seated market concerns about the sustainability of consumer strength [1][2]. Group 1: Earnings Performance - 83% of the 317 S&P 500 companies that have reported earnings exceeded expectations, yet stock prices generally fell post-announcement [1]. - Companies like Procter & Gamble (PG) and PepsiCo (PEP) experienced initial stock price increases after reporting strong earnings, but ultimately saw declines in the following days [3]. Group 2: Market Sentiment - The prevailing market environment suggests a tactical "sell-the-news" approach, with investors opting to take profits rather than establish new long positions [2]. - Negative earnings surprises have led to significant stock price drops, with companies like Philip Morris International (PM) and Chipotle Mexican Grill (CMG) facing severe sell-offs following disappointing results [4]. Group 3: Exceptions to the Trend - A few companies managed to resist the broader sell-off, including Las Vegas Sands (LVS), Wingstop (WING), and Builders FirstSource (BLDR), which showed resilience due to specific business strengths [5]. - Despite these exceptions, the overall sentiment in the consumer sector remains pessimistic, with investors wary of future economic uncertainties [5].

Core Insights - Builders FirstSource reported mixed Q2 2025 results with adjusted EPS of $2.38, exceeding the consensus estimate of $2.21, while GAAP revenue was $4.23 billion, slightly below the forecast of $4.28 billion [1][2] - Both earnings and sales declined year-over-year, indicating ongoing challenges in new construction volumes and margin pressures [1][5] Financial Performance - Adjusted EPS decreased by 32.0% from Q2 2024, while revenue fell by 5.2% year-over-year [2] - Adjusted EBITDA dropped 24.4% to $506.1 million, and free cash flow decreased by 30.5% to $255.0 million [2][8] - Gross profit margin declined by 2.1 percentage points to 30.7%, reflecting increased competition and lower volumes in the housing market [2][6] Market Trends - Net sales fell 5.0% due to weakness in core homebuilding markets, with single-family sales down 9.1% and multifamily sales down 23.3% year-over-year [5] - Repair and remodel sales increased by 3.0%, providing some support amid slowing new construction activity [5] Strategic Focus - The company is expanding its range of manufactured and value-added products, integrating digital tools, and driving productivity through scale [4] - Value-added products accounted for 46.8% of sales, but these sales dropped by 8.7% [7] - Acquisitions contributed 5.0% to revenue growth, with recent purchases including Alpine Lumber and O.C. Cluss [9] Operational Efficiency - Operations and productivity initiatives yielded $5 million in savings year-to-date, with a goal of $45–65 million for fiscal 2025 [11] - Selling, general, and administrative expenses rose to 23.3% of sales, partly due to investments in ERP technology [11] Future Outlook - Management reaffirmed full-year 2025 guidance for net sales of $14.8–$15.6 billion and adjusted EBITDA of $1.5–$1.7 billion [14] - Single-family housing starts are expected to decline by 10–12%, while multifamily starts are projected to decrease in the mid-teens [14] - The company anticipates that acquisitions will add around 5% to annual sales [14]

Group 1 - The logistics sector has seen significant engagement from investors, particularly in the ASEAN and US markets, with a focus on banks, telecommunications, logistics, and hotels [1] - The popularity of insurance companies in the Philippines has influenced investment strategies, leading to diversification beyond traditional savings in banks and properties [1] - The investment approach has evolved from initial investments in blue-chip companies to a diversified portfolio across various industries and market capitalizations [1] Group 2 - The entry into the US market occurred in 2020, following a period of learning and analysis through platforms like Seeking Alpha [1] - The investor has holdings in US banks, hotels, shipping, and logistics companies, reflecting a strategy similar to that in the ASEAN market [1] - The use of comparative analyses between the US and Philippine markets has enhanced investment decision-making [1]

Group 1 - Builders FirstSource (BLDR) shares have underperformed over the past year, losing approximately 25% of their value due to a decline in residential construction activity [1] - On a recent Thursday, shares remained relatively flat as investors reacted to the ongoing challenges in the market [1] Group 2 - The company has been impacted by weakening conditions in the residential construction sector, which has affected its stock performance [1]

[Part I — Financial Information](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for Q2 and H1 2025 detail decreased net sales and income, increased assets from acquisitions, and significant financing activities [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales for Q2 2025 decreased to **$4.23 billion** from **$4.46 billion** year-over-year, with net income falling to **$185.0 million** and diluted EPS at **$1.66** Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $4,234,064 | $4,456,340 | $7,891,560 | $8,347,692 | | **Gross margin** | $1,299,041 | $1,462,684 | $2,414,282 | $2,762,538 | | **Income from operations** | $311,287 | $489,483 | $495,728 | $863,080 | | **Net income** | $185,031 | $344,090 | $281,335 | $602,871 | | **Diluted EPS** | $1.66 | $2.87 | $2.50 | $4.95 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$11.46 billion** from **$10.58 billion** at year-end 2024, primarily due to acquisitions, with total liabilities rising to **$7.29 billion** from increased long-term debt Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $87,020 | $153,624 | | Goodwill | $3,988,853 | $3,678,504 | | **Total assets** | **$11,464,555** | **$10,583,086** | | Long-term debt, net | $4,669,983 | $3,700,643 | | **Total liabilities** | **$7,286,463** | **$6,286,616** | | **Total stockholders' equity** | **$4,178,092** | **$4,296,470** | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, net cash from operating activities decreased to **$473.4 million** due to lower net income, while cash used in investing activities significantly increased to **$1.06 billion** due to acquisitions Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $473,368 | $769,271 | | Net cash used in investing activities | ($1,059,473) | ($315,625) | | Net cash provided by (used in) financing activities | $519,501 | ($444,233) | | Net change in cash and cash equivalents | ($66,604) | $9,413 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail key accounting policies and events, including three acquisitions totaling **$891.9 million**, issuance of **$750 million** in new senior notes, and amendment of the revolving credit facility to **$2.2 billion** - During the first six months of 2025, the company completed acquisitions of Alpine Lumber, Cluss Lumber, and Truckee Tahoe for a combined total of approximately **$891.9 million**, net of cash acquired[35](index=35&type=chunk) Net Sales by Product Category (in thousands) | Product Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Manufactured products | $1,803,373 | $2,035,238 | | Windows, doors and millwork | $1,958,766 | $2,145,328 | | Specialty building products and services | $2,023,106 | $1,996,410 | | Lumber and lumber sheet goods | $2,106,315 | $2,170,716 | | **Total Net sales** | **$7,891,560** | **$8,347,692** | - Goodwill increased from **$3.68 billion** at year-end 2024 to **$3.99 billion** as of June 30, 2025, with the **$310.3 million** increase attributable to acquisitions completed during the period[45](index=45&type=chunk)[46](index=46&type=chunk) - On May 8, 2025, the company issued **$750.0 million** of 6.75% senior unsecured notes due 2035[53](index=53&type=chunk) - On May 20, 2025, the company amended its Revolving Facility, increasing commitments from **$1.8 billion** to **$2.2 billion** and extending the maturity to 2030[61](index=61&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **5.0%** decrease in Q2 net sales to core organic decline and commodity price deflation, partially offset by acquisitions, with gross margin percentage falling due to normalization [Recent Developments](index=19&type=section&id=Recent%20Developments) Key developments in H1 2025 include three strategic acquisitions totaling approximately **$891.9 million**, a new **$500 million** share repurchase plan, and issuance of **$750 million** in senior notes - Completed acquisitions of Alpine Lumber, Cluss Lumber, and Truckee Tahoe for an aggregate price of approximately **$891.9 million**, net of cash acquired[79](index=79&type=chunk) - The board authorized a new **$500.0 million** share repurchase plan on April 30, 2025, replacing the prior plan[81](index=81&type=chunk) - In the first six months of 2025, **3.4 million** shares were repurchased for **$403.6 million**[82](index=82&type=chunk) - Issued **$750.0 million** of 6.750% senior unsecured notes due 2035 and amended the Revolving Facility to increase commitments to **$2.2 billion**[83](index=83&type=chunk)[84](index=84&type=chunk) [Current Operating Conditions and Outlook](index=20&type=section&id=Current%20Operating%20Conditions%20and%20Outlook) The U.S. housing market shows a near-term slowdown, with Q2 2025 single-family housing starts decreasing **8.4%**, though the long-term outlook remains positive due to the market being underbuilt - U.S. single-family housing starts for Q2 2025 were **0.3 million**, an **8.4%** decrease compared to Q2 2024[87](index=87&type=chunk) - The long-term housing outlook is considered positive as the industry remains underbuilt, though near-term demand is pressured by macroeconomic uncertainty like interest rates and inflation[88](index=88&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) For Q2 2025, net sales fell **5.0%** to **$4.2 billion** due to an **8.5%** core organic decline, with gross margin percentage decreasing to **30.7%** due to normalization - Q2 2025 net sales decreased **5.0%** YoY, driven by an **8.5%** decrease in core organic sales and a **1.5%** decrease from commodity price deflation, partially offset by a **5.0%** increase from acquisitions[92](index=92&type=chunk) Net Sales by Product Category - Q2 2025 vs Q2 2024 (in millions) | Product Category | Net Sales 2025 | % of Net Sales | Net Sales 2024 | % of Net Sales | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Manufactured products | $953.1 | 22.5% | $1,056.1 | 23.7% | (9.8)% | | Windows, doors and millwork | $1,030.0 | 24.3% | $1,114.9 | 25.0% | (7.6)% | | Specialty building products and services | $1,117.8 | 26.4% | $1,093.6 | 24.6% | 2.2% | | Lumber and lumber sheet goods | $1,133.2 | 26.8% | $1,191.7 | 26.7% | (4.9)% | | **Total Net sales** | **$4,234.1** | **100.0%** | **$4,456.3** | **100.0%** | **(5.0)%** | - Q2 2025 gross margin percentage decreased to **30.7%** from **32.8%** in Q2 2024, primarily driven by single-family and multi-family margin normalization[95](index=95&type=chunk) - For the six months ended June 30, 2025, net sales decreased **5.5%** YoY, driven by an **8.4%** core organic decline, **1.2%** from commodity deflation, and **0.8%** from one fewer selling day, partially offset by a **4.9%** contribution from acquisitions[99](index=99&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position of **$1.6 billion** as of June 30, 2025, with net excess borrowing availability of **$1.54 billion** under its expanded **$2.2 billion** Revolving Facility - Total liquidity as of June 30, 2025, was **$1.6 billion**, consisting of cash on hand and net borrowing availability under the Revolving Facility[110](index=110&type=chunk) Revolving Facility Availability (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Maximum borrowing amount | $1,850.7 | $1,714.3 | | Outstanding borrowings | ($233.0) | — | | Letters of credit | ($79.6) | ($83.3) | | **Net excess borrowing availability** | **$1,538.1** | **$1,631.0** | - Cash provided by operating activities decreased to **$473.4 million** for the six months ended June 30, 2025, from **$769.3 million** in the prior year period, largely due to lower net income[113](index=113&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate fluctuations and commodity price volatility, where a **1.0%** rate increase on the Revolving Facility would add approximately **$2.3 million** in annual interest expense - The company is exposed to interest rate risk on its Revolving Facility[120](index=120&type=chunk) - A **1.0%** increase in interest rates would result in approximately **$2.3 million** of additional annual interest expense based on the **$233.0 million** outstanding borrowings as of June 30, 2025[120](index=120&type=chunk) - The company is exposed to commodity price risk, particularly for lumber products[121](index=121&type=chunk) - Delays in passing on material price increases to customers can negatively impact operating results[121](index=121&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level, with no material changes to internal control over financial reporting identified - Based on their evaluation, the CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[126](index=126&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[127](index=127&type=chunk) [Part II — Other Information](index=29&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal claims, including construction defect claims, for which a reasonable estimate of potential loss cannot be determined, though management believes the ultimate outcome will not have a material adverse effect - The Company faces a number of known and threatened construction defect legal claims, for which a reasonable possibility of loss cannot be estimated at this time[129](index=129&type=chunk) - Management believes the outcome of pending claims will not materially affect the company's consolidated financial position, cash flows, or results of operations[131](index=131&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - There were no material changes to the risk factors reported in the company's 2024 Form 10-K[133](index=133&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased approximately **3.4 million** shares of common stock under a new **$500 million** share repurchase authorization, with **$500 million** remaining available - On April 30, 2025, the board approved a new share repurchase authorization of up to **$500.0 million**, terminating the prior plan[134](index=134&type=chunk) Common Stock Repurchases - Q2 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | | April 1-30, 2025 | 3,358,899 | $118.25 | $500,000,000 | | May 1-31, 2025 | 1,055 | $120.64 | $500,000,000 | | June 1-30, 2025 | — | — | $500,000,000 | | **Total** | **3,359,954** | **$118.25** | **$500,000,000** | [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No information is reported under this item - None[136](index=136&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, debt agreements, and required CEO/CFO certifications - Exhibits filed include the Indenture for the new 2035 notes, an amendment to the Credit Agreement, and CEO/CFO certifications (Sections 302 and 906)[139](index=139&type=chunk)

Core Insights - Builders FirstSource, Inc. (BLDR) reported mixed results for Q2 2025, with earnings exceeding estimates but net sales falling short [1][5][11] - Year-over-year declines in both earnings and net sales were attributed to lower core organic sales and commodity deflation, although acquisitions provided some offset [1][6][11] Financial Performance - Adjusted earnings per share were $2.38, surpassing the consensus estimate of $2.35 by 1.3%, but down 32% from the previous year [5][11] - Net sales totaled $4.23 billion, slightly missing the consensus mark of $4.24 billion by 0.1% and declining 5% year-over-year [6][11] - Core organic sales decreased by 8.5%, with Single-Family and Multi-Family sales down 9.1% and 23.3%, respectively [6][7] Product Category Sales - Value-added product sales, which accounted for 46.8% of quarterly net sales, were $1.98 billion, down 8.7% from the prior year [8] - Specialized product sales increased by 2.2% to $1.12 billion, while Lumber & Lumber Sheet Goods sales decreased by 4.9% to $1.13 billion [9] Margin and Guidance - Gross margin contracted by 210 basis points to 30.7%, influenced by margin normalization in Single-Family and Multi-Family segments [12] - The company revised its 2025 net sales guidance to between $14.8 billion and $15.6 billion, down from earlier expectations of $16.05-$17.05 billion [17][18] Operational Highlights - BLDR achieved approximately $5 million in productivity savings through operational excellence and supply-chain initiatives [13] - As of June 30, 2025, the company had cash and cash equivalents of $87 million and liquidity of approximately $1.6 billion [14] Debt and Cash Flow - Long-term debt increased to $4.67 billion, with a net debt to trailing 12-month adjusted EBITDA ratio of 2.3x [15] - Free cash flow for the second quarter was $255 million, down from $366.7 million a year ago [15] Future Outlook - The company plans to invest in value-added solutions, digital tools, and operational improvements to strengthen its market position [4] - Adjusted EBITDA is now expected to be between $1.5 billion and $1.7 billion, down from earlier projections [19]

Financial Data and Key Metrics Changes - Net sales decreased by 5% to $4.2 billion, driven by lower organic sales and commodity deflation, partially offset by growth from acquisitions [20][21] - Gross profit was $1.3 billion, a decrease of 11% compared to the prior year, with a gross margin of 30.7%, down 20 basis points [23] - Adjusted EBITDA was $506 million, down 24%, with an adjusted EBITDA margin of 12%, down 300 basis points from the prior year [24] Business Line Data and Key Metrics Changes - Multifamily sales declined by 23%, while single-family sales decreased by 9%, attributed to lower starts activity and value per start [21] - Repair and remodel increased by 3%, driven by strength in the Mid Atlantic and South Central regions [21] - The company invested over $35 million in value-added solutions, including opening a new millwork location in Florida and upgrading plants in seven states [8][9] Market Data and Key Metrics Changes - Single-family starts are expected to decrease through year-end due to builders managing construction pace amid affordability concerns [10] - Multifamily remains muted due to higher input and financing costs, but it is still considered an appealing and profitable business [11] - The company anticipates a headwind to sales of $400 million to $500 million in multifamily and a headwind to EBITDA of less than $200 million [28] Company Strategy and Development Direction - The company focuses on three key areas: customer service, operational excellence, and disciplined capital allocation [6][7] - Investments in technology, including the implementation of a single ERP system, are expected to unlock growth and efficiency opportunities [7] - The company remains committed to pursuing higher return opportunities through acquisitions, despite a slower M&A environment [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging market environment but emphasizes the importance of operational discipline and customer service [5][10] - The company expects net sales for 2025 to be in the range of $14.8 billion to $15.6 billion, with adjusted EBITDA forecasted between $1.5 billion and $1.7 billion [28][29] - Management remains confident in the company's ability to drive long-term growth by executing its strategy and maintaining financial flexibility [29] Other Important Information - The company completed a $750 million offering of senior unsecured notes to pay down the balance on its ABL [26] - The company has a net debt to adjusted EBITDA ratio of approximately 2.3x and a fixed charge coverage ratio of roughly 6x [26] - The company has repurchased 3.3 million shares at an average price of $118.27 per share, with $500 million remaining on its share repurchase authorization [27] Q&A Session Summary Question: How is the company strengthening its competitive position in a disappointing starts environment? - Management highlighted improvements in on-time and in-full performance, aligning closely with builders to enhance affordability and efficiency through technology [34][35] Question: What drove the sequential improvement in gross margins in Q2? - Management noted better-than-expected performance in multifamily and repair and remodel sectors contributed to the margin outperformance [40][41] Question: Can you discuss the impact of Canadian lumber tariffs on your outlook? - Management has factored in the duties into their guidance, expecting minimal impact on financial results in 2025 due to lead times on existing orders [62][64] Question: How does the company plan to balance market share and margin? - Management emphasized maintaining a fair return while being prepared to walk away from business that does not meet margin expectations [91][92] Question: What is the status of the ERP rollout and associated costs? - The ERP project went live on July 1, with expected cash expenses of $140 million in 2025, but no changes to the projection at this time [108][110]

Financial Data and Key Metrics Changes - Net sales decreased by 5% to $4.2 billion, driven by lower organic sales and commodity deflation, partially offset by growth from acquisitions [19][20] - Gross profit was $1.3 billion, a decrease of 11% compared to the prior year, with a gross margin of 30.7%, down 20 basis points [21] - Adjusted EBITDA was $506 million, down 24%, with an adjusted EBITDA margin of 12%, down 300 basis points from the prior year [22] Business Line Data and Key Metrics Changes - Multifamily sales declined by 23%, while single-family sales decreased by 9%, attributed to lower starts activity and value per start [20] - Repair and remodel increased by 3%, driven by strength in the Mid Atlantic and South Central regions [20] - The company invested over $35 million in value-added solutions, including opening a new millwork location in Florida and upgrading plants in seven states [7][8] Market Data and Key Metrics Changes - Single-family starts are expected to decrease through year-end due to builders managing construction pace amid affordability concerns [9] - Multifamily remains muted due to higher input and financing costs, but it is still considered an appealing and profitable business [10] - The company anticipates a headwind to sales of $400 million to $500 million in multifamily and a headwind to EBITDA of less than $200 million [26] Company Strategy and Development Direction - The company focuses on three key areas: customer service, operational excellence, and disciplined capital allocation [5][6] - The transition to a single ERP system is expected to unlock further growth opportunities and efficiencies [6] - The company remains committed to pursuing higher return opportunities through acquisitions, with a focus on expanding value-added product offerings [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging market environment but emphasizes the importance of operational discipline and customer service [4][7] - The company expects net sales for Q3 to be between $3.65 billion and $3.95 billion, reflecting a weaker than normal building season [28] - The full-year guidance for net sales is projected to be between $14.8 billion and $15.6 billion, with adjusted EBITDA expected to be between $1.5 billion and $1.7 billion [26] Other Important Information - The company completed a $750 million offering of senior unsecured notes to pay down the balance on its ABL [24] - Capital expenditures for the quarter were $86 million, with $61 million allocated to acquisitions and $391 million used for share repurchases [25] - The company has a net debt to adjusted EBITDA ratio of approximately 2.3x, indicating a comfortable leverage position [24] Q&A Session Summary Question: How is the company strengthening its competitive position in a disappointing starts environment? - The company focuses on improving on-time and in-full performance, enhancing integrations with builders, and leveraging technology to optimize the build process [34][36] Question: What drove the sequential improvement in gross margins in Q2? - The improvement was attributed to better-than-expected performance in multifamily and repair and remodel segments, despite ongoing pressures [41][42] Question: What is the outlook for gross margins in Q3 and the second half of the year? - The company expects sequential normalization or declines in margins due to the competitive landscape and softer starts environment [43] Question: How does the company view the impact of Canadian lumber tariffs on its forecast? - The company has factored in the duties and believes the impact will be minimal in 2025, with lumber prices remaining stable [62] Question: What are the main drivers of the sequential change from Q2 to Q3? - The main drivers include a weakening start environment, continued normalization of multifamily, and commodity deflation [70][71] Question: How is the ERP rollout progressing? - The ERP system went live on July 1, with ongoing support and adjustments being made to address initial challenges [106][107]

Q2 2025 Performance - Net sales decreased by 5% to $42341 billion compared to $445634 billion in the prior year[13, 100] - Gross profit decreased to $13 billion, with a gross margin of 307%[13] - Net income decreased by 462% to $185 million, representing 44% of sales[13] - Adjusted EBITDA decreased by 244% to $506 million, with an adjusted EBITDA margin of 12%[13] - Adjusted diluted EPS decreased by 32% to $238[13] - The company generated $255 million in free cash flow during Q2[14] Strategic Execution and Capital Allocation - The company invested over $35 million in expanding value-added facilities and opened a new millwork location in Florida[16] - Approximately 47% of the product mix in Q2 was value-added products[16] - The company repurchased $391 million of common stock in Q2, representing approximately 48% of total shares outstanding since the buyback program began in August 2021[16] - $61 million was deployed on one acquisition to expand the company's footprint into high-growth geographies and enhance value-added offerings[26] 2025 Outlook - The company anticipates total net sales between $148 billion and $156 billion, compared to $164 billion in 2024[56] - The company projects adjusted EBITDA between $15 billion and $17 billion, compared to $23 billion in 2024[56]