Financial Data and Key Metrics Changes - In Q2 of fiscal 2025, consolidated net sales reached $452 million, an increase of 8% year over year [26] - Adjusted EBITDA for Q2 increased by $11 million or 10% year over year to $124 million, with an adjusted EBITDA margin of 27.5%, a 40 basis point improvement year over year [28][25] - Net income for Q2 increased by $5 million year over year to $54 million, or $0.37 per share [28] Business Line Data and Key Metrics Changes - Residential segment net sales for Q2 were $437 million, up 9% year over year, driven by sell-through growth and new products [29] - Residential segment adjusted EBITDA for Q2 was $122 million, up 11% year over year, with an adjusted EBITDA margin of 28% [29] - Commercial segment net sales for Q2 were $15 million, down 4% year over year, primarily due to weaker demand [29] Market Data and Key Metrics Changes - The residential segment achieved 9% year-over-year growth in Q2, with mid-single-digit sell-through growth [7] - The company noted a stable contractor backlog of approximately seven weeks, indicating steady demand [19][103] - Channel inventory levels are below historical averages, reflecting a conservative inventory strategy [20][76] Company Strategy and Development Direction - The proposed merger with James Hardie aims to enhance material conversion and create significant synergies, targeting $125 million in cost synergies and $500 million in incremental sales synergies [11][13] - The company is focused on product innovation, channel expansion, and sustainability, aiming for double-digit long-term growth [10][9] - Investments in new product launches and a vertically integrated recycling network are central to the company's growth strategy [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties while maintaining strong growth momentum [20][21] - The company anticipates steady demand across its outdoor living portfolio, with positive sell-through trends continuing into April [19] - Despite acknowledging potential economic challenges, management believes the company is well-positioned to outperform the market [21][22] Other Important Information - The company has been recognized on Barron's list of the 100 Most Sustainable U.S. Companies for the first time [18] - The acquisition of Northwest Polymers enhances the company's recycling capabilities, supporting long-term growth and margin expansion [17] Q&A Session Summary Question: Guidance on decking and railing versus exteriors in the second half - Management did not provide specific guidance but noted that deck, rail, and accessories have been outgrowing exteriors [40] Question: Near-term cost structure and PVC pricing - Management indicated that costs have been steady, with some modest inflation offset through pricing actions [41] Question: Sales synergies from the merger - Management highlighted significant sales synergies and emphasized stability in the sales organization during the integration process [46] Question: Recycling asset acquisitions and cost reductions - Management mentioned ongoing investments in recycling to achieve incremental cost savings, with a focus on long-term benefits [49] Question: Demand across retail and pro channels - Growth is observed in both channels, with slightly higher growth in the pro channel compared to retail [55] Question: Impact of tariffs on supply chain - The annualized tariff exposure is estimated between $12 million and $15 million, with pricing actions taken to mitigate impacts [57] Question: Customer reactions to the merger - Positive feedback has been received from contractors and channel partners regarding the merger, indicating excitement about strategic benefits [66] Question: Concerns about affordability due to price increases in components - Management acknowledged tariff impacts on certain products but noted efforts to remain competitive [106]

Financial Data and Key Metrics Changes - In Q2 of fiscal 2025, consolidated net sales reached $452 million, an increase of 8% year over year [25] - Adjusted EBITDA for Q2 increased by $11 million or 10% year over year to $124 million, with an adjusted EBITDA margin of 27.5%, a 40 basis point improvement year over year [27][22] - Net income for Q2 increased by $5 million year over year to $54 million, or $0.37 per share [27] Business Line Data and Key Metrics Changes - Residential segment net sales for Q2 were $437 million, up 9% year over year, driven by sell-through growth and channel expansion [28] - Commercial segment net sales for the quarter were $15 million, down 4% year over year, primarily due to weaker demand in the spring products business [28] - Residential segment adjusted EBITDA for Q2 was $122 million, up 11% year over year, with an adjusted EBITDA margin of 28% [28] Market Data and Key Metrics Changes - The residential segment achieved 9% year-over-year growth in Q2, with high single-digit sell-through growth contributing to this performance [6] - The overall market for repair and remodel has been challenging, but the company has consistently outperformed this market [6][20] - Contractor backlogs remain stable at approximately seven weeks, indicating steady demand [18][101] Company Strategy and Development Direction - The company is focused on material conversion, product innovation, and channel expansion, targeting double-digit long-term growth and sustained margin expansion [10][11] - The proposed merger with James Hardie is expected to enhance growth opportunities and create significant synergies, with an estimated $125 million in cost synergies and $500 million in incremental sales synergies [11][13] - Investments in new product launches and a vertically integrated recycling network are key components of the company's growth strategy [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges uncertainty in the broader economy but remains confident in the company's ability to outperform the market [19][20] - The company expects residential sell-through growth scenarios in the low single-digit to mid-single-digit range for the second half of the fiscal year [31] - Despite macroeconomic challenges, the company believes it can sustain margins while investing in growth initiatives [19][21] Other Important Information - The company has been recognized for its sustainability efforts, being named to Barron's list of the 100 Most Sustainable U.S. Companies for the first time [17] - The acquisition of Northwest Polymers enhances the company's recycling capabilities and supports long-term growth objectives [16] Q&A Session Summary Question: Guidance for the second half regarding decking and railing versus exteriors - Management did not provide specific guidance but noted that deck, rail, and accessories have been outgrowing exteriors [39] Question: Near-term cost structure and PVC pricing - Management indicated that costs have been steady, with some modest inflation offset through pricing actions [40][42] Question: Sales synergies from the merger with James Hardie - Management expressed confidence in significant sales synergies but noted it is early to discuss specifics [46][48] Question: Focus on acquiring additional recycling assets - Management highlighted ongoing investments in recycling to achieve cost savings, with a focus on regional supply [49] Question: Demand across retail and pro channels - Growth is seen in both channels, with slightly higher growth in the pro channel, and some regional weakness noted in the Northeast due to weather [53][55] Question: Impact of tariffs on pricing - The annualized tariff exposure is estimated between $12 million and $15 million, with pricing actions taken to offset these costs [56] Question: Customer reactions to the merger - Positive feedback has been received from contractors and channel partners regarding the merger, indicating excitement about the strategic benefits [61][65] Question: Sell-through assumptions for the back half of the year - Management clarified that the guidance reflects a conservative approach, not indicating a decline in sell-through [66][84] Question: Inventory positioning in the channel - The company is maintaining conservative inventory levels, ensuring they are below historical averages [71][76] Question: Mix pressures and contractor backlogs - No significant shifts in product mix were noted, and contractor backlogs remain steady at seven weeks [100][101]