Financial Data and Key Metrics Changes - The company reported net sales of $660 million for the first quarter of 2025, representing a 3% increase compared to the same period last year [6] - Adjusted EBITDA was $67 million, with an adjusted EBITDA margin of 10.2%, which is 220 basis points lower than the same period last year [8][30] - Free cash flow was negative $41 million, a decline from positive $12 million in the same period last year [9][33] - Net income decreased to $13.3 million from $37.5 million year-over-year, primarily due to higher selling, general, and administrative expenses [28] Business Line Data and Key Metrics Changes - The Supreme acquisition contributed to a 10% growth, while legacy business saw a 2% increase in net average selling prices (ASP) [7] - Market volume declines of 9% were noted in the base business, particularly affecting customers in the repair and remodel market [7] - Builder Direct sales increased by over 4% compared to the prior year, despite declines in the new construction market [8] Market Data and Key Metrics Changes - Year-over-year market volume declines were observed across all channels and end markets in the first quarter [10] - The new construction market is expected to decline by mid-single digits for the full year 2025, influenced by lower foot traffic and builder commentary [12] - The repair and remodel market is anticipated to decline by high to mid-single digits for 2025, with fluctuations in order patterns noted [14][16] Company Strategy and Development Direction - The company is focusing on cost preservation and maintaining a strong balance sheet while investing in targeted growth areas [17] - Facility consolidations are underway to reduce costs and improve service, with expected financial benefits materializing in the third quarter [19] - Strategic initiatives include "Align to Grow," "Lead through Lean," and "Tech Enabled," aimed at positioning the company for future growth [20][25] Management's Comments on Operating Environment and Future Outlook - Management noted that the current demand environment is choppy, with expectations of continued weakness in the second half of 2025 [10][12] - Tariffs are impacting consumer confidence and large ticket purchases, contributing to a more cautious outlook for the year [16][39] - The company anticipates adjusted EBITDA for 2025 to be in the range of $315 million to $365 million, with a focus on balancing near-term performance and long-term growth [41][42] Other Important Information - The company ended the quarter with $113.5 million in cash and $358.6 million in liquidity available [30] - A new share repurchase program was authorized, allowing for the repurchase of up to $50 million of common stock [33] Q&A Session Summary Question: How is the company thinking about pricing in relation to tariffs? - Management indicated that additional pricing actions are necessary to counteract tariff impacts, using a surcharge methodology [46][48] Question: What is the expected demand cadence for Q2? - Management expects to see normal seasonality in Q2, but acknowledges challenges due to tariff costs and inefficiencies in certain factories [53][66] Question: How will margin progression look in Q2? - Margins are expected to improve from Q1, but not to the company's standards due to fixed cost pressures and tariff impacts [64][66] Question: What factors will influence the EBITDA guidance range? - The range is primarily dictated by market demand and the company's ability to gain market share amidst tariff uncertainties [69][70] Question: How does the company view its position relative to tariffs? - The company believes it is better insulated from tariffs due to its production being predominantly in the U.S., allowing it to absorb volume changes more effectively [75][78]