Financial Data and Key Metrics Changes - Consolidated sales increased by 3.5% to a record, driven by acquisitions and engineered solutions for high-performance buildings, but adjusted EBIT declined due to higher SG&A expenses and temporary inefficiencies from plant consolidations [12][13] - Adjusted EPS declined, influenced by lower adjusted EBIT and higher interest expenses from increased debt levels for M&A activities [12][13] Business Line Data and Key Metrics Changes - Construction Products Group sales grew to a record, led by solutions for high-performance buildings, but faced challenges from longer project lead times and weak sales in disaster restoration due to lower storm activity [14] - Performance Coatings Group achieved record sales with broad-based growth, although adjusted EBIT was flat due to growth investments and unfavorable mix [14][15] - Consumer Group sales growth was driven by M&A and pricing to recover inflation, but volumes declined due to soft DIY demand, particularly in November [15] Market Data and Key Metrics Changes - Europe was the fastest-growing region, driven by M&A and foreign exchange, while North America grew approximately 2% due to increased high-performance building solutions offset by soft DIY demand [13] - Emerging markets, particularly Africa and the Middle East, showed growth by serving high-performance building and infrastructure projects [13] Company Strategy and Development Direction - The company is focusing on optimizing SG&A levels in response to soft market conditions while continuing to invest in high-growth opportunities, including high-performance buildings and business intelligence [9][11] - The MAP 3.0 program is being developed to enhance operational efficiency and align spending with market demand [11][31] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions are expected to remain sluggish, with soft DIY demand and longer lead times for construction projects, but they anticipate outgrowing underlying markets due to targeted growth investments [19][20] - The company expects consolidated sales to increase by mid-single digits in the third quarter, with adjusted EBIT anticipated to grow mid to high single digits [20][21] Other Important Information - The company announced an agreement to acquire Kalzip, a German-based leader in metal-based roofing and facades, expected to close in the fiscal fourth quarter of 2026 [18] - Cash flow from operations increased by $66.3 million compared to the prior year, allowing the company to pay down $127 million in debt and return $169 million to shareholders [17] Q&A Session Summary Question: Performance of the three operating segments - Management indicated that deterioration was observed across all three segments in the latter part of the quarter, with unique monthly performance variations [29] Question: SG&A initiative details - The $100 million SG&A initiative includes approximately $70 million in personnel-related cuts and $30 million in discretionary expense reductions [31] Question: Incremental margins in Q3 and Q4 - Management expects better incremental margins due to easier comps and structural SG&A actions, alongside anticipated improvements in unit volume growth [38] Question: Impact of government shutdown on costs - Transitory costs were attributed to higher conversion costs and inefficiencies from plant consolidations, with a significant impact on margins [47] Question: Pricing realization in Consumer Group - Price contribution was less than 1% in Q2, with challenges in achieving full realization due to weak demand [66] Question: Outlook for organic sales growth - Management expects better organic growth in the second half of the fiscal year, driven by focus growth investments and easier comparisons [99]

Financial Data and Key Metrics Changes - Consolidated sales increased by 3.5% to a record, driven by acquisitions and engineered solutions for high-performance buildings, but adjusted EBIT declined due to higher SG&A expenses and temporary inefficiencies from plant consolidations [12][13] - Adjusted EPS declined, influenced by lower adjusted EBIT and higher interest expenses from increased debt levels for M&A activities [13] Business Line Data and Key Metrics Changes - Construction Products Group sales grew to a record, led by solutions for high-performance buildings, but faced challenges from longer project lead times and weak sales in disaster restoration due to lower storm activity [14] - Performance Coatings Group achieved record sales with broad-based growth, although adjusted EBIT remained flat due to growth investments and unfavorable mix [14][15] - Consumer Group sales growth was driven by M&A and pricing to recover inflation, but volumes declined due to soft DIY demand, particularly in November [15] Market Data and Key Metrics Changes - Europe was the fastest-growing region, driven by M&A and foreign exchange, while North America grew approximately 2% due to high-performance building solutions, offset by soft DIY demand [13] - Emerging markets, particularly Africa and the Middle East, showed growth by serving high-performance building and infrastructure projects [13] Company Strategy and Development Direction - The company is focused on optimizing SG&A levels in response to soft market conditions while continuing to invest in high-growth opportunities, including high-performance buildings and business intelligence [9][11] - The MAP 3.0 program is being developed to enhance operational efficiency and align spending with market demand, with an estimated annual benefit of approximately $100 million once fully implemented [8][9] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions are expected to remain sluggish, with soft DIY demand and longer lead times for construction projects, but they anticipate outgrowing underlying markets due to targeted growth investments [19][20] - The company expects consolidated sales to increase by mid-single digits in the third quarter, with adjusted EBIT anticipated to grow mid to high single digits [20][21] Other Important Information - Cash flow from operations increased by $66.3 million compared to the prior year, allowing the company to pay down $127 million in debt and return $169 million to shareholders through dividends and share repurchases [17] - The company announced an agreement to acquire Kalzip, a German-based leader in metal-based roofing, expected to close in the fiscal fourth quarter of 2026 [18] Q&A Session Summary Question: Performance of operating segments - Management indicated that deterioration in performance was observed across all three segments as the quarter progressed, with initial growth in September followed by declines in October and November [29] Question: SG&A initiative details - The $100 million SG&A initiative includes approximately $70 million in personnel-related cuts and $30 million in discretionary expense reductions, with a focus on reallocating spending to growth areas [31][32] Question: Incremental margins outlook - Management expects improved incremental margins due to easier comparisons and structural SG&A actions, alongside anticipated unit volume growth [38] Question: Impact of government shutdown - The government shutdown significantly impacted absorption and conversion costs, with an estimated loss of almost a percentage point in margin due to higher conversion costs [47] Question: Pricing realization in Consumer Group - Price contribution was less than 1% in Q2, with challenges in achieving full realization due to weak demand and price elasticity issues [66] Question: Software system implementation impact - The implementation of new software systems caused temporary sales delays, but these issues have been resolved, and sales are expected to normalize [73] Question: Future expectations for The Pink Stuff business - The Pink Stuff acquisition is on track for base case expectations, with the reversal of the earnout due to not meeting aggressive sales targets [61]

Financial Data and Key Metrics Changes - Consolidated sales increased by 3.5% to a record, driven by acquisitions and engineered solutions for high-performance buildings, but offset by continued DIY softness and longer construction project lead times [10] - Adjusted EBIT declined as top-line growth and MAP 2025 benefits were more than offset by higher SG&A expenses from growth initiatives, M&A deal costs, healthcare, and temporary inefficiencies from plant and warehouse facility consolidations [10] - Adjusted EPS declined due to lower adjusted EBIT and higher interest expense resulting from increased debt levels to finance M&A activity [10] Business Line Data and Key Metrics Changes - Construction Products Group sales grew to a record, led by solutions for high-performance buildings, but project lead times lengthened due to the government shutdown [11] - Performance Coatings Group achieved record sales with broad-based growth across businesses, although adjusted EBIT was approximately flat due to growth investments and unfavorable mix [12] - Consumer Group sales growth was driven by M&A and pricing to recover inflation, but volumes declined due to soft DIY demand, particularly in November [12] Market Data and Key Metrics Changes - Europe was the fastest-growing region, driven by M&A and foreign exchange, while North America grew approximately 2% [10] - Emerging markets, particularly Africa and the Middle East, showed growth by serving high-performance building and infrastructure projects [10] Company Strategy and Development Direction - The company is focused on optimizing SG&A levels in response to soft market conditions while continuing to support high-growth opportunities [9] - Investments are being made in high-performance buildings, business intelligence, and innovation, with a goal of enhancing product offerings and market reach [8] - The company is pursuing acquisitions to expand its system offerings, such as the recent agreement to acquire Kalzip, a German-based leader in metal-based roofing [16][19] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions are expected to remain sluggish, with soft DIY demand and longer lead times for construction projects, but they remain optimistic about outgrowing underlying markets due to targeted growth investments [17] - The company anticipates consolidated sales to increase by mid-single digits in the upcoming quarter, with adjusted EBIT expected to grow mid to high single digits [17][19] - Management expressed uncertainty about the timing of construction pipeline conversions to actual activity, influenced by government shutdowns and market volatility [17][19] Other Important Information - Cash flow from operations increased by $66.3 million compared to the prior year, attributed to improved working capital efficiency [15] - The company has a strong liquidity position of $1.1 billion, allowing for flexibility in capital allocation decisions [15] - The company reversed a $12.7 million liability associated with an earnout for the acquisition of Star Brands Group, reflecting a more conservative sales forecast [12][13] Q&A Session Summary Question: Performance of operating segments - Management indicated that deterioration in performance was observed across all three segments, particularly in construction and consumer, as the quarter progressed [28] Question: SG&A initiative details - The $100 million SG&A initiative includes approximately $70 million in personnel-related cuts and $30 million in discretionary expense reductions [30] Question: Incremental margins outlook - Management expects better incremental margins due to easier comps and structural SG&A actions, along with anticipated improvement in unit volume growth [36] Question: Impact of government shutdown on sales - Management noted that the government shutdown significantly impacted absorption and conversion costs, leading to a loss of nearly a percentage point in margin [45] Question: Pricing realization in Consumer Group - Price contribution was less than 1% in Q2, with expectations for similar performance in Q3 due to price elasticity issues [64] Question: Software system implementation impact - The implementation of new systems in the consumer segment was temporary, and management confirmed that operations are now fully running [70]