BlueLinx Holdings Inc. (BXC) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by and welcome to the Bluelinks Holding Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode and today's call is being recorded. We will begin with opening remarks and introductions. At this time, I would like to turn the conference over to your host, Investor Relations Officer, Tom Arribito. Please go ahead.

Thank you, Operator, and welcome to the Blue Link's second quarter 2026 earnings call. Joining me on today's call is Shane Reddy, our Chief Executive Officer, and Kelly Wall, our Chief Financial Officer and Treasurer. At the end of today's prepared remarks, we'll take questions. Our second quarter news release and Form 10Q were issued yesterday after the close of the market, along with our webcast presentation, and these items are available in the Investor section of our website. We encourage you to follow along with the detailed information on the slides during our webcast. Today's discussion contains forward-looking statements. Actual results may differ significantly from those forward-looking statements due to various risks and uncertainties, including the risks described in our most recent SEC filings. Today's presentation includes certain non-GAAP and adjusted financial measures that we believe provide helpful context for investors evaluating our business. Reconciliations to the closest GAAP financial measure can be found in the appendix of our presentation. Now, I'll turn it over to Chan.

Thanks, Tom. Good morning, everyone. Our second quarter results, once again, demonstrate our ability to deliver profitable sales growth in a challenging market environment, validating the strength of our channel and product strategies. Our disciplined execution led to volume growth at solid margins across key customer channels and multiple product types. We believe our results reflect market share gains since we're operating in another year of single and multifamily housing start declines and tepid repair and remodel activity. During the second quarter, net sales increased more than 4% year-over-year, driven by the zero specialty product sales, higher volumes in key specialty product categories, and improved pricing across multiple product categories. We also continue to experience favorable pricing and volumes for lumber and structural products. Specialty gross margin was 18.7%, excluding the benefit of an import duty-related item, and structural gross margin was 10.9%, both of which reflect the strength of our customer value proposition and effective inventory management. Our channel strategy continues to fuel our branded specialty product expansion, both geographically and skew-wise with strategic suppliers. Engineered wood, siding, no-work, industrial, outdoor living, and other specialty products represented approximately 70% of net sales and 80% of gross profit in the quarter. The momentum from the multifamily channel efforts, builder pull-through programs, and national accounts focus, all key commercial growth strategies, continue to drive our financial results and generate value for our entire customer base. Specifically, these initiatives are helping us drive volume growth and share gains by converting projects and customers to the strategic brands and products we carry, thereby strengthening our position as a preferred commercialization partner for suppliers. The virtuous cycle is leading to stickier relationships with both. Suppliers want partners who can help them grow across multiple channels and markets in a fast-paced, dynamic landscape, and that's what we're doing. Our value-add services and enhanced capabilities enable us to execute our strategic initiatives at scale and to accelerate both customer and supplier growth objectives, no matter the market conditions. Our disruptive go-to-market approach is unlocking commercial growth opportunities for both customers and suppliers, thereby differentiating us in the marketplace. We have driven volume growth and share gain in key customer channels, such as multifamily and key national accounts, demonstrating another quarter of key channel growth. We've also expanded our geographic footprint faster than before with key suppliers like Huber, Louisiana Pacific, Georgia Pacific, Royal Wesley, and RDI. We even have national distribution rights for Georgia Pacific on key specialty product lines that support our multifamily efforts. A new partnership with Trex was also announced that gives Bluelink's distribution rights in 11 markets located in our Central, North, and South regions. This recent award on the part of Trex, the national distribution rights we have with Georgia Pacific, and the accelerated expansion rights provided by our other key strategic suppliers demonstrate the merits of the commercialization accelerant we are providing to key vendors via our channel focus. Our results also demonstrate the benefits of disciplined inventory management and strong execution. Our ability to quickly align inventory levels with changing market conditions reflects the strength of our operating discipline and commercial capabilities. As market conditions improve, we expect these capabilities to help support even stronger cash flow generation. We are also making meaningful progress on our AI and digital transformation initiatives, several of which are designed to enhance commercial activities, fine-tune our inventory management capabilities, and generate e-commerce sales. We also remain committed to supporting the advanced digital platforms of our largest customers to accelerate channel growth. Finally, our financial position remains strong with $655 million in available liquidity at the end of the quarter, providing us with the flexibility to reinvest in the business and to pursue strategic growth opportunities. Now, for a few more highlights on our second quarter results. We generated net sales of $814 million in adjusted EBITDA of $35.6 million for a 4.4% adjusted EBITDA margin, a significant improvement on a year-over-year basis. DeStero, which we acquired in Q4 2025, contributed nearly $25 million of net sales and $2.7 million in adjusted EBITDA. Adjusted net income was $9.1 million, or $1.15 per diluted share. The strategic sales and product expansion efforts are what led to these higher volumes and increased net sales at solid margins. For example, multifamily and national accounts continued to perform well, with volumes up 11% and 2% year-over-year, respectively. Our Build or Pull-Through program, supported by strategic customer partnerships, also contributed growth across key channels and specialty product categories. In addition, our differentiated value proposition, combined with geographic and SKU expansion with key suppliers, throw meaningful year-over-year growth across multiple product lines that are aligned with our channel growth strategy. The newly announced Trex relationship demonstrates the merits of our strategy, and we look forward to validating it for them and supporting our customers' commercial objectives. We're especially proud of our solid gross and EBITDA margin performance in spite of cost inflation, freight challenges, and a competitive pricing environment. For example, diesel fuel costs and flatbed freight rates are up 50% and nearly 17% on a year-over-year basis, respectively. We've also dealt with approximately 60 cost increases from suppliers through Q2 2026 compared to around 20 through Q2 2025, yet we've performed well for another consecutive quarter. These results reflect disciplined execution of our product and channel strategies, supported by operational and business excellence initiatives that relate to effective pricing and cost pass-through, strategic value-add services, exceptional customer service, branded product expansion, and disciplined inventory management. Overall, our Q2 results reflect continued momentum and solid financial performance, despite low consumer confidence, persistent inflation, economic uncertainty, and geopolitical volatility, driving weakness in the housing and repair and remodel markets. Our strategy is working, so we remain focused on executing it through the cycles and positioning Blue Links for accelerated growth when the industry recovers. I want to thank our associates for the dedication they bring every day to our customers, suppliers, one another, and the communities we serve. Now, I'll turn it over to Kelly, who will provide more details on our financial results and our capital structure.

Thanks, Sam, and good morning, everyone. Let's first go through the consolidated highlights for the quarter. Overall, both specialty products and structural products delivered solid sales growth and gross margins in what continues to be a challenging new home construction and repair and remodel market. Net sales for the second quarter of 2026 were $814 million, up over 4% year-over-year. Total gross profit was $140 million, and gross margin was 17.2%, up from 15.3% in the prior year period. As Sham mentioned, second quarter results included a $7.2 million duty-related benefit. Excluding this benefit, gross margins for Q2 of 2026 were 16.3%. SG&A was $107 million, up $12 million from last year's second quarter. This increase was mainly due to the acquisition of Testero in Q4 last year, fuel and third-party freight expenses, and employee-related expenses. Given the challenging demand environment and continued pressure on operating costs, consistent with prior quarters, we remained focused on disciplined expense management and identifying additional opportunities to improve efficiency. Net income for the quarter was $6.4 million, or $0.81 per diluted share. Adjusted net income was $9.1 million, or $1.15 per diluted share, up approximately 64%. Our effective income tax rate for the quarter was 43%, including the impact of discreet items. Adjusted EBITDA was $35.6 million, up approximately 33% in the second quarter of 2025, due to the benefit of the duty-related item, increased sales, including NECERO, improved overall gross margins, and disciplined expense management. Not including the duty-related item, Q2-2026 adjusted EBITDA was $28.4 million for a margin of 3.5%. Naturally, we are very pleased with the year-over-year increase in adjusted EBITDA in both the first and second quarters. Turning out the second quarter results for specialty products. Net sales for specialty products were $564 million in the second quarter, up nearly 4% year-over-year. This increase was driven by the thorough sales and higher volumes in EWP and industrial, as well as increased pricing in nearly all product types. partially offset by volume pressures in millwork due to cheaper alternatives and aggressive local market pricing, though we were able to improve pricing in Q2 on a year-over-year basis. Gross profit from specialty product sales was $113 million, up over 12% year-over-year. Specially gross margin was 20%, up from last year's 18.5%. Excluding the $7.2 million duty-related item in Q2 of 2026, Specially gross margin was still up 20 basis points from last year to 18.7%. Sequentially, Specially gross margins improved 60 basis points when compared to Q1 of 2026. In the current third quarter, we expect specialty product gross margin to be in the range of 18% to 19%, with daily sales volumes flat compared to the second quarter of 2026 and higher than the third quarter of 2025. Now moving on to structural products. Structural products had a strong quarter. Net sales were $250 million for structural products in the second quarter, up nearly 6% compared to the prior year period. This increase was primarily due to higher lumber pricing and volumes when compared to last year, offsetting volume pressures and panels. Gross profit for structural products was $27 million, an increase of 40% year-over-year, and structural gross margin was 10.9%, up from 8.2% in the same period last year. Sequentially, structural gross margin was the same as Q1-2026. We expect Q3 structural product gross margin to be in the range of 8.5% to 9.5%, with daily volumes to be higher than the second quarter of 2026 and also higher than the third quarter of 2025. Now turning to our balance sheet. Our liquidity continues to be very strong. At the end of the quarter, cash and cash equivalents were $318 million, roughly in line with Q1 of 2026. When considering our cash on hand and undrawn revolver capacity of $337 million, the available liquidity was approximately $655 million at the end of the quarter. Total debt, excluding our real property financing leases, was $377 million, and net debt was $58 million. Our net leverage ratio was 0.6 times trailing four-quarter adjusted EBITDA, and we have no material outstanding debt maturities until 2029. Additionally, given the strength of our balance sheet and continued strong liquidity, we remain well-positioned to support our strategic initiatives. These strategic initiatives include continued growth with our large national customers and in the multifamily channel, with this focus also benefiting our traditional regional customers. Demand pull-through efforts to drive strategic product sales that benefit our customers. Continued specialty product expansion with key suppliers, Trex being a great example. Our business and digital transformation efforts and other organic and inorganic growth initiatives. Now moving on to working capital and free cash flow. During the second quarter, we had operating cash flow of $11 million and free cash flow of $9 million, both a significant improvement over the second quarter of 2025, primarily due to higher adjusted EBITDA and more effective inventory management. Turning now to capital allocation. During the quarter, we incurred $2.8 million of CapEx, primarily related to investments in our facilities, technology, and fleet. For the second half of 2026, we expect CapEx will be higher than the prior year as we continue to invest in our business to address facility maintenance and improvements, as well as drive our channel and support our product strategies and business and digital transformation initiatives. Also, during the second quarter, we repurchased $2 million of our common shares, and as a quarter end, we have a total of $54 million remaining under our share repurchase authorizations. Our guiding principles for capital allocation remain consistent with prior quarters. We intend to maintain a strong balance sheet, which enables us to invest in our business through economic cycles, expand our geographic footprint, pursue a disciplined inorganic growth strategy as demonstrated by our acquisition of the STERA, and opportunistically return capital to shareholders through share repurchases. We also plan to maintain a long-term net leverage ratio of two times or less. Overall, we are pleased with our strong second quarter results, especially given the challenging market backdrop. We were particularly pleased to see an increase in net sales, earnings, and free cash flow year over year. That said, we remain measured in our expectations for the balance of 2026 as housing conditions are expected to remain soft. Operator, we will now take questions.

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Ryuban Garner with the Benchmark Company. Your line is now open. Please go ahead.

Good morning, everyone, and congrats on the strong results, guys. Thank you. thank you maybe to start the the checks um announcement uh last month or a couple weeks ago um any way to frame up the size of your decking business kind of before this and where you think that this could go now that you have access to uh obviously the leader in the space yeah so i appreciate the question the it's too early to say to frame up we've never We've never talked numbers about any given category other than to say our outdoor living products category is a key strategic specialty growth area for us.

I would say that the Trex opportunity of being the number one branded decking product out there with significant share gives us a much more sizable opportunity than we've had before. And with respect to the 11 markets, those markets are great markets for us. They align well with our distribution footprint. And given the channel strategy, we believe we can drive outpaced growth for Trex in those markets and across our entire consolidated outdoor living products category. One thing I want to note is we are a brand new distribution partner for Trex. The announcement was made not three or four weeks ago or three weeks ago, and we are prepared to start loading product in this month, which I think is an incredibly quick turnaround time for a two-step distribution partner. and more importantly, validates the strength of our operational excellence initiatives and our processes for honestly being the best commercialization partner for any given vendor in our space.

That's great. And then the gross margin performance, very impressive and encouraging in the environment. I guess, can you just walk through how you're handling this? you mentioned 60 vendor increases has obviously been transportation and energy costs rising like what what has allowed you guys specifically to kind of work through all that are you um you know is it is it pricing action action surcharges are there costs that have you have taken out that have helped offset this just walk through um kind of what's allowed you to perform that way Yeah, so let me start with operational excellence, which is driven by our Centers of Excellence in Atlanta with support out in the field as we have, for example, regional directors of operations in the field who support the branches around basically landed cost excellence combined with people in Atlanta who do the same thing.

So, I would say at a high level, it has to do with managing the inflationary cost impact through strategic pricing initiatives, which is both in the context of price increases and surcharges. We take a bespoke approach. In other words, we have proactively worked with our customers to see what makes sense for them. And then it comes down to operational execution or speed of execution, which we have a very disciplined approach to doing so quickly. in the field. So, that's on the cost side from an inflation standpoint. From a supplier perspective, that comes down to execution as well. We work very closely with our suppliers to make sure we're fully aware of the price increases well in advance, and we collaborate or we work with our customers in order to execute as quickly as possible to push those price increases through. As you can imagine, with 60-plus distribution centers, multiple MSAs that we operate in that cover different kind of local market environments, the seamless execution by having people work together efficiently and effectively may make for a good, you know, operating model when passing cost increases through. But look, at the end of the day, Ruben, the most important thing is you have to be able to sell value, right? You can't just push cost increases through outside of supplier increases in particular, which hit the whole market, including our competitors. But with respect to the other cost increases without having a value-added service proposition that people are willing to pay for in light of the inflationary pressures they're all facing. So suffice it to say, if you look at the landscape out there, I would posit that we are able to push these. We are able to price effectively because of the value we provide, which is allowing us to grow and drive margins in an otherwise challenging market, not just from a macro standpoint, but also from a declining housing start perspective as well.

And the other component there is what we've seen on the structural side. At a 10.9% gross margin in the quarter, that's up materially from prior periods. And as we talked about in the first quarter call, we've seen an increase in that demarket pricing for both lumber and panels that we've benefited from quite well, as not only are we pricing effectively there, but we're managing our inventory so that we have supply available in the market to meet our customers' demands there as they're coming to us for more volumes. And again, just to kind of reiterate Cham's point, right, our efforts on the business and digital transformation front have been a key part of this, specifically our transportation management system that we put in place, which is helping us manage our freight costs in a significantly higher fuel and third-party freight cost environment, and then also our pricing initiatives where, you know, through the use of data and better tools, we're better able to assist our regions and branches in pricing more effectively and more quickly, which is allowing us to pass through these vendor cost increases as well as price to value add that we're bringing to the market effectively.

And then last one for me, I think the press release said daily sales volumes higher year over year, also higher sequentially. Just to clarify, is that – I mean, is it as simple as I would assume there's no reason pricing is lower in the third quarter than the second, so revenue is expected to be higher in 3Q versus the second quarter? And if so, that's a pretty reasonable acceleration in year-over-year revenue growth. Can you just walk through kind of what gives you the confidence? A lot of companies, especially with the exposure to new housing, construction, are kind of a little more modest in the back half. So just talk about what's driving that big deal.

Yeah, what we're seeing is total revenue would be down from – sorry, would be up, you're right, from Q2 to Q3. And, again, I think it's just as we continue to execute our strategies, we're driving, you know, volume growth, certainly relative to the overall market, but also back on the pricing front as we continue to price more effectively. That's benefiting us as well. And then on the structural side, we are, you can see in our press release, expecting margins to kind of come back down in the back half of the year to something that's more aligned with traditional levels. but they have been elevated in the first part of the quarter, which is also going to help with that as well as we move forward.

Great. Thanks. Congrats again on the results and the news with Trex, and good luck on the forecast. Thank you. Thanks.

The question comes from the line of Jeffrey Stevenson with Loop Capital. Your line is now open. Please go ahead.

Hi. Thanks for taking my questions today. I was wondering if you could walk me through how specialty products volumes trended throughout the quarter and, you know, what product categories in particular came in, you know, better than worse than anticipated. Then following up on, you know, Ruben's question, you know, both, you know, average daily sales volumes, you know, expected to be up both year over year and sequentially. Is this, you know, really driven by your, you know, share gain initiatives, you know, helping you, you know, drive, you know, above market growth given, you know, continued residential demand headwinds?

Yeah, let me just let me take the first part of the question. So, you know, from a category standpoint, you know, we saw pressure in millwork volumes, which isn't surprising given tepid R&R activity, as well as panels, which has been, you know, a challenging market, just given oversupply, if you will. But for the most part, those were two of our more challenged categories. When I think about our share gain efforts, you know, we are focused on multifamily. We are focused on driving national accounts business at scale, which ends up benefiting our entire customer base. And last but not least, we are executing or implementing strategic builder pull-through programs in alignment with key channel partners that are driving sales in very specific specialty product categories. All of the above is what leads to the share gain in an otherwise down or challenging market. So, whether the market is great or terrible, I'm confident that our teams can execute successfully on getting more and more of the pie because of the strategic approach we're taking to helping our customers grow their business and also being the best commercialization partner for our suppliers. And if you take a look at the evidence that supports that, you know, we've talked about growing from zero to 20-plus markets with LP in 18 to 20 months. We've gone national with Georgia Pacific as it relates to key product lines that support the multifamily business. We've expanded substantially with Huber in multiple markets in a very short period of time. We launched with True Xteria in 14 markets at once, Trex in 11 markets. You know, generally speaking, if you look at historic trends, it's rare that you can expand in double-digit markets all at once with key suppliers who are in a relatively short time. And I would say that our commercial – our channel strategy is what's driving that accelerated geographic and skew expansion with respect to key product lines in our suppliers. So, you know, at the end of the day, you know, we are focused on winning at the local market and regional levels and continuing to gain share because of the focus. And then, of course, the operational excellence initiatives, the business excellence initiatives on value-add services and our transportation management system, the alignment, you know, The e-commerce and AI are all serving as amplification or accelerants to the general business efforts that are underway.

Yeah, and Ruben, more specifically about what we're seeing in kind of the current quarter. I'm sorry, Jeff. What we're seeing here in the current quarter, you know, we are year-over-year volumes are up for both specialty and structural and low single digits. And on the pricing front, same thing, right? We're seeing especially pricing up low single digits and then structurals actually up kind of in the mid-teens level. And then sequentially, we're continuing to expect overall volumes, you know, while they are down slightly at the beginning of the quarter, we're seeing that trend reverse out, and we expect that the overall trends will be slightly positive sequentially from Q3 to Q4. And again, as a reminder, you know, typically we have – I'm sorry, from Q2 to Q3. And as a reminder, typically our Q3 quarter is higher, right, seasonally than Q2, and we don't have any reason to expect that that would change. And as I look at some of the specific kind of categories on the volume front, you know, all of our categories are up flat to up, some of them kind of high single digits in certain certainty categories, again, across both specialty and structural as we start the third quarter.

Oh, thanks for all that, you know, details, you know, very helpful, so I appreciate that. And, you know, one category, you know, where you've, you know, seen deflation pressure over the last kind of one to two years has been EWP, and I wondered if you could update on the competitive environment there, and your competitor talked to kind of third-quarter price increases, you know, just wondered, you know, should we, you know, expect pricing to stabilize and, you know, inflect higher in that category?

Yeah, so the competitive landscape hasn't changed per se, but where I would emphasize kind of our strength is on margin and volume growth due to the builder pull-through programs that we've established with key channel partners to drive growth and participate more, you know, participate more opportunistically across the country. So, that's been a win for us. I would say that the deflationary impact, if you compare us to others out there, has had less impact on us. And I would say that it's because of the value-add services we're providing that justify the price maintenance, by and large, relative to maybe others out there. So, look, at the end of the day, it's a very competitive environment. There are, you know, there are products coming in from overseas. For example, LVL, Euro LVL, that puts pricing pressure on locally market-produced EWP, but at the same time, because of our value-add services, creative pricing programs, channel-partner relationships that are driving, honestly, profitable sales growth for end builders is ultimately enabling us to, quite frankly, not only gain share but also maintain margins and not be adversely impacted as much as you might expect with EWP pricing that others may be experiencing.

That's helpful, Shane. And then last one for me, just, you know, SG&A step up sequentially due to their acquisition and higher fuel and third-party freight costs, among others. And should we expect this to be, you know, a run rate moving forward or just kind of any, you know, hand-holding on kind of SG&A in the back half of the year would be helpful?

Yeah, I think on the SG&A front, last quarter we mentioned that we'd expect each quarter to be kind of at $100 to $105 million, with the middle two quarters being higher and then Q1 and Q2, Q4 being lower. We came in at $107 million in Q2. to, again, higher fuel costs, freight costs, higher employee costs as well relative to our original plan tied to our overperformance and our compensation structure internally as well as higher healthcare costs, which is a trend that we're continuing to see. So, as we kind of carry that forward into the back half of the year, what I would tell Jeff, is that we'd expect to average about $105 million in SG&A for both quarters with Q3 being slightly higher than Q4, which is the typical thing you see seasonal.

Yeah, and I'd also like to point out, I mean, we don't talk about, we don't get formal breakdowns per se, but, you know, when we think about volumes, you have out of warehouse and you have direct, and then you have others that come out of Reload. Again, due to our channel strategy and the efforts we've employed in order to drive growth and gain share, all of the above have increased our out-of-warehouse volumes, which obviously drive up SG&A costs at the warehouse level. So, on the one hand, you know, the SG&A costs are higher, there's just a commensurate increase to the disproportionate growth out of warehouse with respect to volumes when compared to directs, which quite frankly have been pressured as we continue to lean on our channel share gain, very specific elements of the channel strategy. Great.

Last question comes from the line of Kurt Jinger with DA Davidson. Sun, your line is now open. Please go ahead.

Great. Thanks. And good morning, everyone. You had mentioned a couple examples, right, of vendor relationships that you've expanded pretty quickly. I'm just curious in the context of Trex, like what's kind of the timeline or or kind of progression that you would expect ramping up to, you know, a reasonably sized base of business or kind of initial expectations for run rate contributions?

Yeah, so, again, it's too early to talk about numbers, but I can tell you that given the sophisticated processes we put in place around product launches here at Blue Links, We are moving very quickly, you know, with POs being issued by the end of this week and product being loaded in this month and with sales and, you know, profit hitting the 26 P&L in Q3, Q4. But, you know, ultimately it's going to take time to ramp up as we go out and we convert business. We, you know, fortunately with Trex, it's an incredibly well-branded product that's sold in all these markets. And given, you know, the – given how we execute, I'm confident we'll be able to not only execute quickly but convert quickly. But it's really a 2027 impact. It will take time for us to really get known in the marketplace. Like I said, we're a new supplier, a new distribution partner for Trex. And, you know, after, you know, some strong relationship building over the last year, we put ourselves in a position to earn their trust and then make us a key partner of theirs. And like I said, I've said it over and over again, I believe in our team's ability to execute to a point where we're able to convince not only our long-term partners, but our new partners that we are the best commercialization partner out there and thus be in a position to expand in new markets on a much faster clip than we may have been able to do a few years ago. But I can't give you specifics yet because we're obviously only a few weeks in. But, I mean, again, we're issuing POs and loading product in very quickly, and we'll be on our road to a long-term partnership with Trash, which I'm really excited about.

Okay, that's helpful. But, I mean, 2027 is probably when this becomes more of a conversation in terms of what's pouring through the P&L lately.

That's right. Right. I mean, just, you know, in the early days, right, we'll have a significant working capital investment. Then we'll, you know, we have general views around turn days and obviously return on working capital. But, you know, like I said, I mean, it's going to take time. So there'll be some investments up front, but look at 2027 as the real year of execution. Quite frankly, I think it's – to Trucks' credit, moving this early with their new distribution footprint is great because it gets us in place to not only hit the ground running this year, but be a partner to them before we start developing and negotiating programs with our customers heading into 27. So we've got a head start. And that's, you know, as a new partner, that's a great place to be. Yep, agreed.

And I apologize, this is going to be probably maybe an impossible question, but I'll ask it anyways. When you think about these, you know, larger vendors with kind of strict dual distribution models, is there a rule of thumb in terms of, you know, distributor A, distributor B, kind of general market share, or is it, you know, I guess really market dependent?

So, it's all about local market execution, right? Our supplier partners aren't going to go with – they're only going to go with distributors in markets who they believe can help grow their overall business, right? who can take their full capacity across the entire country or where they're otherwise serving and make sure they have the right distribution partners to go execute on their sales growth strategies, quite frankly, because we're essentially an extension of their business. We provide the sales teams, the value-add services, the local market contacts in order to drive commercialization of their product. At the market level, it's really head-to-head competition with our competitors And where we compete there is around value-add services. You know, we do, for example, takeoff services or innovative programs to, you know, mixed. You know, for example, we are trying to go up and to the right as it relates to our structural specialty mix. We're shifting our specialty. But, again, as we try and serve the whole house needs of any given end user, vis-a-vis our customers and channel partners, having the structural and the specialty gives us the ability to sell into the whole house and ultimately provide a much better value proposition for our customers as they compete for business from their customers. And so those are the kind of nuances at the local market level that give us the ability to win business. You know, we provide, you know, whether it's, you know, bundling of various products and having creative pricing around those bundled product offerings to help our suppliers compete against, you know, their competitors who might carry multiple product lines, right? That's how we win at the local market level. So I don't think it's A, B, C or D per se. It's really they've got their partners, and then we're out in the market competing on value. And I think our results show that we're able to effectively compete on value, maintain pricing, maintain margins, and while at the same time grow business in an otherwise tough market. Now, look, our channel strategy, as I think about multifamily, as I think about, you know, leveraging the national accounts to drive a better value proposition across the country and ultimately every customer benefits, Trex being a good example, right, because every customer in those 11 markets are going to benefit from that product offering as they do from the products we offer from LP or Huber and so on. So that plus multifamily and obviously these builder pull-through programs, ideally, you know, and again, these double-digit market launches and SKU expansion efforts show that our value to suppliers continues to get stronger and stronger. And ultimately, you know, the goal would be to be able to carry our suppliers' products across the entire country because that will most effectively support the channel strategy. and we continue to make significant progress on that front.

Okay, that's great, Keller. I mean, maybe the last part answers this next question, but what are kind of the primary second-order effects with what I'll call kind of upgrading the vendor base, right? I mean, does that help you maybe attract another vendor in a different category that you've been pursuing or open the door to new kind of dealer partners, you know, just beyond these wins in isolation. Can you just talk about kind of what that means for the Blue Links platform?

Yeah, the answer is yes, absolutely. It just, it validates not only our strategy, but it strengthens our value proposition via brand association, talk to your brand association, you know. And then as you think about programs that are out there, I'm sorry, if you think about how big builders and other builders build, whether it's, you know, they're building 15 to 20 homes or they're building hundreds of homes, and then if you think at multifamily, if you look at multifamily, they have specs in place, right? And so to the extent that we can drive high-value-add branded product offerings, whether it be with LP, Trax, Huber, Roseburg, and, you know, Georgia Pacific and so on, what that does is it, you know, people want to be with winners, right? Suppliers want to be with winners, and we're winning. And it will continue. And by the way, you know, as we look at, for example, the Tourist Serial rollout with Royal Westlake, But Westlake, that's another example. So these, it's just wins to get more wins, and then they take us further down the road to serving the whole house needs of our customers' customers. And, you know, if we can do that and continue to do it well, then obviously it will enable more, you know, greater dealer business and national accounts business, independent lumberyard business, and so on at the local, regional, and national level.

Perfect. Okay, that makes sense. Just lastly, from an internal perspective, you know, what type of investments or kind of human capital, what are kind of the focus areas ahead of kind of that rollout, right? Do you need to add, you know, specific salespeople, things like that? Is that something to be aware of from kind of a spend perspective? Just talk about that a little bit at a high level if you could.

Yeah, so the answer is yes, but it also depends as you go down into each market. So there are markets where we have existing resources that can be leveraged. There are investments we will make, both CapEx and OpEx, as determined through our sophisticated product launch process that's being done in direct collaboration with Trex in order to ensure not only a smooth rollout, but to maximize the economic opportunity that this relationship will create for both of us. And quite frankly, you know, what's great about it is they've had existing distribution relationships in those 11 markets that we can baseline against in order to kind of set the mark from a, you know, growth perspective. But the answer is, yeah, we will hire, where it makes sense, outdoor living specialists who will be focused on the trust product lines. We will also have – we will make investments with our own teams as it relates to significant training to make sure they're up to speed on those product lines in collaboration with Trex. Like, we'll be sending dozens of people to the, you know, Trex headquarters in one of their mills very quickly to make sure we can hit the ground running and, quite frankly, exceed their expectations as it relates to us. So, yeah, there are, you know, there are all kinds of G&A expenses. But from a headcount perspective, it will be very targeted and thoughtful and tied to the growth strategy on a market-by-market basis. We'll also leverage the product management team and the category specialists we have in Atlanta, which is a shared resource, who will work directly with on-the-ground resources to accelerate, you know, sales being driven by not only the product managers but our territory managers who have very strong customer relationships in the field.

Great. Okay. Appreciate all the color. Thank you.

That concludes the Q&A session. I will now turn the call back over to Tom Arbido for closing remarks.

Thanks, Bella. Thank you again for joining us today, and we look forward to speaking with you in November as we share our third quarter 2026 results.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect, everyone. Have a great day.