Financial Data and Key Metrics Changes - Net sales for Q3 2025 were $1.56 billion, reflecting a 5% decline from $1.65 billion in the previous year due to modest declines in overall volumes and pricing [20][34] - Adjusted EBITDA decreased by 15% to $140 million, with the adjusted EBITDA margin falling to 9% from 10% a year ago [34] - Operating cash flow was $399 million, maintaining a robust cash position of over $1 billion, providing flexibility for strategic objectives [35][43] Business Line Data and Key Metrics Changes - Retail segment sales were $594 million, a 7% decline driven by softer repair and remodel demand and strategic exit from lower margin product lines [34] - ProWood volumes declined by 5%, while Deckorators achieved 5% unit growth and 8% net sales growth, including a 31% increase in SureStone decking [36] - Packaging sales were $395 million, down 2%, with a 3% organic unit decline offset by 1% growth from recent acquisitions [38] - Construction sales were $496 million, down 7%, primarily due to volume and pricing pressure in site-built units [39] Market Data and Key Metrics Changes - The company is experiencing cyclically soft demand, ongoing trade uncertainty, and competitive pricing pressures, creating a difficult operating environment [20][21] - The packaging segment is stabilizing, providing cautious optimism for 2026, while the construction market remains competitive with builders managing home inventories [29][30] Company Strategy and Development Direction - The company is focused on above-market growth with an emphasis on returns, introducing value-added products to improve margins and addressing underperforming operations through restructuring and divestitures [21][22] - A $1 billion capital expenditure program is in place, with $200 million earmarked for automation to improve throughput and lower costs [22] - M&A remains a key growth strategy, with three bolt-on acquisitions completed this year, and the company is actively exploring further transactions [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism heading into 2026, noting that while market headwinds persist, some business units are stabilizing [21][24] - The company aims for a 12.5% EBITDA margin and 7-10% unit sales growth, with a focus on driving ROIC in excess of 15% [32] - Management highlighted the importance of strategic investments and cost discipline to navigate the current environment and capitalize on future opportunities [30][31] Other Important Information - The company returned significant capital to shareholders, repurchasing nearly 6% of total outstanding shares through October [35][44] - A quarterly dividend of $0.35 per share was approved, representing a 6% increase from the previous year [44] Q&A Session Summary Question: Update on Deckorators and SureStone retail rollout - Management confirmed they are on pace for the 2026 selling season, with good sell-through and positive results despite a challenging market [48][49] Question: Impact of lumber prices on profitability - Management acknowledged that rising lumber prices could pressure profitability but emphasized their balanced pricing strategies to mitigate risks [53][54] Question: M&A opportunities versus share repurchases - The company is currently allocating more free cash flow towards share buybacks while remaining patient for meaningful M&A transactions [66][68] Question: Trends in site-built construction - Management noted that the site-built segment is facing the most significant headwinds, with unclear projections for 2026 due to consumer confidence and affordability challenges [62][63] Question: Strength of factory-built business - Management remains optimistic about the factory-built business, believing it has significant growth potential despite current market challenges [75][76] Question: Packaging business stabilization - Management feels they have found the bottom in the packaging segment and are optimistic about future growth driven by strategic sales efforts and automation investments [97][98]