Financial Data and Key Metrics Changes - Net sales increased by 4.6% to $358.2 million, driven by $24.9 million of inorganic sales from the acquisition of UW Solutions [8][10] - Adjusted EBITDA margin decreased to 12.4%, primarily due to lower price and volume, unfavorable mix, and higher material, tariff, and health insurance costs [8][10] - Adjusted diluted EPS declined to $0.98, mainly driven by lower adjusted EBITDA and higher interest expense [8][10] Business Line Data and Key Metrics Changes - Performance Services net sales increased, driven by inorganic sales from UW Solutions and strong organic growth of 18.6% [9][10] - Metals segment net sales declined slightly, reflecting a less favorable mix, partially offset by higher volume and price [9] - Glass segment net sales declined, with adjusted EBITDA margin moderating due to reduced volume and price from lower end-market demand [9][10] Market Data and Key Metrics Changes - The competitive environment for glass has not improved, leading to lowered expectations for glass volume and price [4][10] - Higher aluminum costs are expected to pressure pricing and volume in the Metals segment [4][10] - Bid activity for glass business remains up compared to last year, but price pressures are impacting volume [4][10] Company Strategy and Development Direction - The company is focused on driving year-over-year net sales and adjusted EPS growth, primarily through Performance Services [5][10] - Strategic actions include tariff mitigation efforts and Project Fortify II to enhance organizational agility [7][10] - The company aims to pursue acquisitions that align with strategic and financial objectives, enhancing product offerings and geographic reach [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over changes impacting guidance but remains optimistic about growth in Performance Services [5][10] - The company anticipates challenges in the glass and metals segments due to competitive pressures and rising costs [4][10] - Despite macroeconomic challenges, management is confident in the company's strong cash flow and balance sheet for future success [15][10] Other Important Information - The One Big Beautiful Bill Act is expected to provide a cash tax benefit primarily impacting fiscal 2026 [11][10] - The company is updating its outlook for net sales to a range of $1.39 billion - $1.42 billion and adjusted diluted EPS to $3.60 - $3.90 [10][11] Q&A Session Summary Question: Can you expand on the organic growth in Performance Services? - Management noted strong growth in UW Solutions, particularly due to regained distribution and cross-selling opportunities [21][23] Question: What is driving the increase in services backlog? - The backlog growth was attributed to projects in the Northeast and efforts to expand into new markets [25][26] Question: What are the expectations for glass segment margins in the next two quarters? - Management expects mid-teens EBITDA margins despite top-line challenges, emphasizing a focus on preserving premium product pricing [32][33] Question: How much of the lowered guide for metals is due to cost pressure? - The pressure is mainly from higher aluminum costs, which have increased by approximately 20% during the second quarter [36][39] Question: Have there been shifts towards smaller or non-traditional projects? - There has been a shift towards smaller projects, particularly in the glass business, which has led to increased competition and lower margins [48][51] Question: What could impact the EPS guidance for FY 2026? - Continued upward cost pressure on aluminum and the effectiveness of cost control measures under Project Fortify II could impact EPS [52][53]