Good day, and thank you for standing by. Welcome to the Third Quarter 2025 Louisiana-Pacific Corporation Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Aaron Howald. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us to discuss LP's results for the third quarter of 2025 as well as our updated outlook for the full year. On the call this morning are Brad Southern, Alan Haughie, and Jason Ringblom, who are LP's Chief Executive Officer, Chief Financial Officer, and President, respectively. As always, after prepared remarks, we will take a round of questions. During this morning's call, we will refer to a presentation that has been posted to LP's IR web page, which is investor.lpcorp.com. Our 8-K filing, earnings press release, and other materials are also available there. Finally, I will caution you that today's discussion contains forward-looking statements and non-GAAP financial metrics as described on Slides 2 and 3 of LP's earnings presentation. The appendix of the presentation also contains reconciliations that are further supplemented by this morning's 8-K filing. Rather than reading those materials, I will incorporate them herein by reference. And with that, I will turn the call over to Brad.

Thanks, Aaron. Good morning, everyone. Thank you for joining us. As usual, I'll discuss some highlights from the quarter before Alan shares more detail about our results and updated guidance. After that, Jason, Alan, and I will be happy to take your questions. As expected, Siding volume in the third quarter was flat. This result in a softening market, especially compared to the difficult comp from last year, reinforces our confidence in our ongoing share gains. 5% growth in Siding sales revenue, driven primarily by price and a strong mix, exceeded our expectations and guidance. While we anticipated the normalization of demand in the shared component of our Siding business, our ExpertFinish, prefinished siding product primarily designed for R&R applications, saw sales volumes increase by 17% year-over-year. The April launch of our ExpertFinish naturals collection, which is a new line of nature-inspired 2-tone colors, has contributed materially to a beneficial price mix effect. ExpertFinish accounted for 10% of overall Siding volume and 17% of overall Siding revenue in the quarter, showing once again the power of SmartSide innovation to drive price, volume growth, and share gains. Inventory levels and sell-through rates held steady through the quarter, consistent with servicing seasonally normal demand levels. The only exception is ExpertFinish, which remains in such high demand that we have implemented a managed order file until new capacity comes online early next year. Total sales in the quarter were down 8% compared to the prior year, and EBITDA of $82 million was also down significantly. The extended trough in OSB prices was the main drag on both metrics. While we obviously cannot control OSB prices, we can manage the OSB business effectively, and our teams did that exceptionally well in the face of what remains a difficult market. The OSB business achieved 80% overall equipment effectiveness or OEE in the quarter, up 2 points from last year. Increasing OEE is never easy, and it can be particularly challenging when we are also managing our capacity with discipline to balance supply and demand. I want to congratulate and thank everyone on the OSB operations team who contributed to this impressive achievement. Our results are only possible because of our teams and the strong culture we have built. In the third quarter, LP was named one of the 50 Best Manufacturers in the United States by IndustryWeek, debuting on the list at #24, and one of very few specialty building products manufacturers to be recognized. We were also named by Newsweek as one of America's Most Admired Workplaces. Finally, as you saw, I informed LP's Board of Directors of my intention to retire this coming February after more than 25 years of service. It has been the honor of my career to lead LP's 4,300-person team. Ultimately, the job of a CEO is to build an engaged culture focused on safety, growth, innovation, and execution to deliver value long after he or she has gone. When we launched LP's transformation strategy, I was daunted by the challenges we faced and the aggressive goals we've set for value creation. I am proud to say that we exceeded those goals. As LP's team and strategy have evolved, the magnitude of the opportunity before us has only grown, and our confidence that we can continue to execute our strategy and achieve our ambitious goals has never been stronger. Jason Ringblom and I have been friends and colleagues for over 20 years. He was instrumental in the development and execution of LP's strategic transformation. He led LP's OSB and EWP businesses for 5 years and for the last 3 led LP Siding business before being named President. This perspective makes him uniquely suited to serve as LP's next CEO. I have total confidence that with Jason, LP's future has never been brighter. And with that, I will turn the call over to Alan.

Thanks, Brad. Before discussing the results, I do want to take a moment to say that working for Brad has been a personal and professional highlight for me. And while they may be tough shoes to fill, I can think of no one better suited for this task than Jason. And with that, Slide 7 of the presentation shows Siding's results for the quarter. As expected, the bulk of growth came from price. Average selling prices were up 5% with prime products of 3% and ExpertFinish prices up 12%. And there were 2 mix phenomena helping this along. First, as Brad mentioned, shed segment volumes normalized after a very strong first half. And as I'm sure you'll recall, strong shed volumes have been a drag on prices earlier in the year. So part of the 5% year-over-year price performance this quarter is simply the lower mix of shed relative to prime and ExpertFinish products. The other mix factor was within ExpertFinish itself, where demand for LP's 2-tone naturals and other higher-priced prefinished products drove outsized year-over-year price gains. This mix shift is also evident in the year-over-year volume column which shows relatively flat volumes in total, but within which prime volumes were down 1% and ExpertFinish volumes were up 17%. Selling and marketing investments, raw material inflation, and other factors were fairly typical, but there are some moving pieces in the other column that are worth mentioning. You may recall that the third quarter of last year saw an unusually high EBITDA margin, in part because of delays in maintenance projects and the resulting inventory build. Impacts which then reversed in the following quarter. So much of what you see in the $20 million of other costs in this waterfall is the nonrecurrence of those events from last year. Among them, inventory absorption is actually a double hit, i.e., we built inventory in the third quarter of last year, which boosted EBITDA, whereas this year, we've reduced inventory, which temporarily hurts EBITDA. But in the long run, it's all just timing; viewing the second half of the year in total simplifies the year-over-year comparisons considerably. The $2 million tariff impact is the retaliatory tariffs LP had been paying to import ExpertFinish into Canada. Those tariffs were rescinded in late August, so we are not currently incurring that expense. Also, as I'm sure you're aware, the Section 232 tariff announcements did not impact LP's OSB or siding manufactured in Canada and imported into the U.S. So other than minor tariff impacts on some of our raw materials, LP is currently bearing minimal tariff costs. The OSB chart on Slide 8 tells a simple but bleak story of soft OSB prices in a challenging demand environment. OSB prices spent most of the quarter barely above variable cost, driven by sluggish demand, particularly in the Southeast. Price realization fared somewhat better than expected due to a combination of the lag in contractual prices and structural solutions mix. And while the small non-price variance is masked rather well, the OSB operations team played the hand they were dealt exceptionally well. Overall efficiency hit 80%, up 2 points from last year, and aggressive cost control helped the OSB segment outperform our algorithmic guidance. Now superficially, this waterfall suggests that price is the only thing that matters in OSB. Perhaps a more accurate reading is that at these low prices, everything matters. So I tip my hat to the OSB team for making the best of a very difficult market. Slide 9 shows cash flow for the quarter, of which, while straightforward, continues to reinforce the value of LP's transformation. $82 million of EBITDA translated to $89 million of operating cash flow after minor adjustments for working capital, taxes, and interest. We invested $84 million in CapEx to support growth of ExpertFinish and Structural Solutions as well as to ensure that our plants continue to operate safely and efficiently. And after $19 million in dividends, we ended the quarter with $316 million in cash and over $1 billion in liquidity, including our undrawn credit facility. Which brings us to guidance on Slide 10. Regrettably, OSB prices have scarcely moved since the last call, so our fourth quarter OSB guidance has only slightly improved. The beneficial lag factors that helped the third quarter have dissipated given how long prices have remained in the doldrums. So all else equal, price realization in the fourth quarter will likely provide less of a tailwind than it did in the third. The resulting $45 million EBITDA loss in the fourth quarter and breakeven for the year are, as always, algorithmic projections of current prices and utilization. For Siding, we reaffirm our full year EBITDA guidance of $430 million. However, for the fourth quarter, the market has continued to weaken, so we anticipate slightly softer growth. We still expect a year-over-year revenue increase in the coming quarter, but of about 3%, and this mostly from price. And much like the third quarter, we expect an outsized contribution from ExpertFinish to both volume and price. We are, therefore, guiding to fourth quarter revenue of about $370 million and to EBITDA of about $82 million. Now this slightly reduces our full year revenue growth rate from 9% to 8% for revenue of roughly $1.68 billion, while increasing our full year EBITDA margin guide to about 26%. Now our South American business is also struggling with a sluggish economy and its results are not fully offsetting our corporate overhead at the moment. Therefore, total company EBITDA for the fourth quarter and full year are both expected to be about $5 million lower than the sum of the Siding and OSB. Nonetheless, our expectation for full year total company EBITDA has actually risen by $20 million from $405 million 3 months ago, to $425 million today. But we're also cutting our CapEx guidance, and there are 2 factors in play here. First, given the current emphasis on capacity management and cost discipline in OSB, we are deferring even more projects in OSB. In Siding, we're balancing steadily improving OEE and initiatives to optimize LP's entire manufacturing portfolio against the backdrop of persistent market softness. As a result, the sense of urgency that motivated Houlton's expansion as the fastest route to additional capacity is now somewhat diminished. And this makes our OSB mill in Maniwaki, Quebec a viable candidate for conversion to Siding, an option we are now exploring. So should we ultimately proceed down that path, it would most likely still provide additional Siding capacity in advance of market demand and would likely do so at a larger scale and with greater capital efficiency. So while we weigh these options, we have paused any further mill-specific spending while continuing the longer lead time mill-agnostic investments. And with that, we'll be happy to take your questions.

Our first question comes from the line of George Staphos with Bank of America Securities.

I appreciate all the details everyone. Congratulations, Brad and Jason, on the news, and we wish you continued progress and success in the next chapters. My first question, Alan, is if you could provide more detail about the potential shift from Houlton to Maniwaki, what’s behind it? How will we ultimately see it impact operations and performance compared to the other? The second question, aimed at Jason and Brad, is in light of recent headlines regarding marketing battles and some of your peers extending relationships with building product distributors to push their products. Would you agree that this creates a more competitive backdrop? Does that change the way you market, or could it potentially help you because your peers might be focused on other areas relative to the Siding business?

George, thanks for the questions. Before I will address your 2 questions. But before we get to that, I just realized that I did misspeak slightly in my prepared remarks a moment ago when I was describing the impact of LPSA on the full year EBITDA guide. In the fourth quarter, the difference between LPSA and corporate unallocated expenses is indeed $5 million. For the full year, as you'll note from the published materials that went out this morning, the difference isn't $5 million, but it's $10 million. So just to be clear, the full year EBITDA is expected to be $420 million, about $10 million lower than the sum of Siding and OSB's breakeven, but still an increase on the previous guidance. So I've got a fog in my thought, hold on. And now I'm going to turn over the question on Maniwaki to my friend and colleague, Jason.

Thank you for the question, George. I'll briefly address mill conversion options. The advantage of our position at LP is that we have several choices. We can expand existing Siding plants by adding a line alongside the current ones, convert additional OSB facilities, and utilize Aspen wood baskets. Maniwaki, as Alan mentioned, is one option, along with Peace Valley. We also have the potential to build a new site leveraging our properties in Wawa, Ontario, or Cook, Minnesota. Ultimately, the decision on the next mill will depend on timing and capital efficiency, along with the network optimization benefits each option can provide. We are still evaluating all these options, but as Alan noted, Maniwaki has become a priority lately due to the OSB market. Regarding competitive dynamics, we haven't observed much disruption in the channel. This is the time when new programs are being established, and we are working through RFPs with various customers. However, our focus remains on our strategy, minimizing distractions, and continuing to grow our market share.

Jason, just a quick one, and I'll turn it over. Aside from the fiber basket for Maniwaki, what else makes it potentially rise to the surface more quickly?

Yes. So Maniwaki is a large OSB facility. So it's got the ability to produce 600 million to 650 million feet of OSB, which translates to, call it, $400 million ish of Siding. So just the scale and relative cost position of that facility, coupled with just the network optimization opportunities that it presents will all be factored into the analysis.

The next call comes from the line of Susan Maklari with Goldman Sachs.

And let me extend my congratulations to both Brad and Jason as well, looking forward to working with you. My first question is about the pricing environment in Siding. Historically, you have announced an increase late in the fourth quarter for it to take effect early the following year. Given the current situation and the varying dynamics around housing and the consumer, how are you approaching pricing as we look towards 2026?

Thank you for your question, Susan. I'll address that. Recently, we announced a price increase, similar to what we've done in previous years. We are also managing our order intake to reduce any inventory buildup in advance of this price increase. Therefore, orders placed in December and in our January order file will reflect the new price list. There’s nothing out of the ordinary here. I would point out that the increases differ by product category and region, but we are aiming for a net increase of around 3% to 4% in 2026.

Okay. And then turning to OSB. When you think about the environment that builders are facing and the commentary we're hearing, especially from the big publics around pulling back on starts at the end of this year and then even into early 2026. How are you thinking about balancing that capacity? The near-term pressures that are there relative to the longer-term outlook for housing and just adjusting the cost structure on a relative basis given those factors?

Yes. So demand for OSB has certainly been soft for the better part of the year. And as a result, our focus has really been on matching capacity to demand. No different than what we've done in prior years where we've experienced soft markets. What I would say today is our utilization rate for OSB is in the high 60s, which essentially matches our committed volumes for the business. So what we felt is if we sell open market wood or bring cash wood to the market. Largely, it ends up in lower prices. So right now, we're focused on really managing costs and optimizing our network relative to the demand we see today.

The next question comes from the line of Ketan Mamtora with BMO Capital Markets.

Brad, I wanted to extend my congratulations as well. I mean it's been a remarkable transformation. This is a much different company today than what it used to be even 10 or 15 years back. So congratulations.

Thank you, Ketan.

And Jason looks forward to working with you. Maybe to start with, can you talk a little bit about you mentioned shed volumes are normalizing in Q3. Can you talk about sort of what you saw there in Q3? And what's contemplated by way of volume as you think about Q4?

So I would say, Ketan, and I'll take that one. I mean, throughout Q3, our order intake and sell-through rates were pretty consistent. In fact, I would say they held up better than maybe we anticipated given the broader softening in the housing and repair/remodel markets. And I think that's a testament really to our commercial team and our focus on innovating around the needs of our end-user customers, specifically ExpertFinish, smooth Siding, naturals, as Brad mentioned, being great product additions that have helped offset the weakness in some of the market segments we play in. Specific to shed, what I would say is, yes, business has normalized in that segment, but we were up year-over-year. So we're very pleased with the progress we continue to make in that particular segment. And we see that continuing going into Q4 as well. Really where the softness resides is more in the new construction segment, particularly in the southern markets. And we see a little bit more resilience in repair/remodel especially in the northern markets where we have a more dominant share position.

Jason, I'll just add to that. Sorry, Ketan. I'll just add that historically, we've kind of seen a bit of seasonality in the shed business where our distributor partners and the shed builders tend to build some inventory in anticipation of spring and summer sales. And that kind of backing off as we get through the summer. And I think what we saw seasonally in shed is pretty consistent with the historic trends that have driven our order file in the past.

Got it. That's helpful. I have one more question. It seems like you're transitioning in the way you're selling your Siding products and your OSB product, trying to align both and sell them more as a bundle. Can you explain what is driving that move and how your customers are responding?

Yes. I'll take that one, Ketan, and I appreciate the question. So back in April, we announced the integration of our OSB and Siding businesses. And really, the main reason for that was to better leverage our resources and better leverage the breadth of our product portfolio in the marketplace. So you're right, we are working on some bundling of programs to help us execute our segment strategies in all areas that we play in. But I would say we're still very much in the infancy stage of that process. We've made some good progress in the big builder segment, but it's still an area we're exploring largely.

The next question comes from the line of Sean Steuart with TD Cowen.

I'll extend my congratulations to both Brad and Jason as well. I want to follow up on the Maniwaki pivot. Can you give us an idea of the timeline to at least begin this project and when you anticipate it might start producing Siding products? Additionally, does the Section 232 determination, which exempts OSB and Siding from Canada, influence the decision at all? From a broader perspective, the determination regarding Section 232 seems to leave things open-ended, allowing the administration to consider changes to the assessment over time. My short question is, are you confident that this will be a permanent exemption for OSB and Siding from Canada? I'll leave it there.

Yes, Sean, this is Aaron. I'll take the 232 component of that question. I don't think anybody is comfortable that policies are current in the current administration. But I will say that the decision to shift to Maniwaki, should we make it, will be a long-term decision based on our long-term expectations about the evolving OSB and Siding markets. The current situation for the 232 tariffs is that neither of those products is subject to a tariff importing it from Canada into the United States. And perhaps a less understood component of the 232 discussion is that the importation of some heavy equipment categories into the United States is less favorable than it is into Canada currently. So for example, if we were to acquire a press or other large equipment for a conversion of an OSB plant in Canada, we would be able to import that equipment at a lower cost into Canada than into the U.S. because of those tariffs.

I would like to stress, though, that that would be a potential benefit, but it's not a reason...

Exactly. Yes. The 232 issue is not the decision maker. It is noise that currently is a net benefit. But the long-term reasons for Maniwaki should we make that decision would be the fundamental market dynamics and the efficiencies that that mill would bring.

Sean, as we have discussed, we aim to be transparent during these calls and explore various options, with some standing out while others diminish in importance. The process is certainly dynamic. Our valuation approach is financially motivated and focuses on long-term sustainability, as Aaron mentioned, with specific considerations for tariffs. When assessing wood costs and network optimization, Maniwaki presents a compelling opportunity in alignment with our existing infrastructure and our initiatives around ExpertFinish growth. As we evaluate our options in the coming quarters, we will conduct thorough financial analyses. When we present our recommendations to the Board, we will clearly outline the reasons behind selecting a particular facility based on expected returns. We see potential in Maniwaki as a leading candidate at this stage, especially since it hasn't been a major focus in our previous discussions.

Understood. And then maybe just one follow-up there, Brad. Part of this reordering of the options is the extent to which the OSB markets unraveled here the last several months. I mean you've positioned this as it's a long-term decision based on optimization of the fiber basket, the portfolio you have. Is there any read-through on you view this OSB downturn as potentially extended beyond what we would normally see? And you're considering Maniwaki in that context as well. This could be a longer trough than we're accustomed to seeing for OSB?

No, we were not intending to signal that at all. Certainly, the near-term outlook for OSB is quite poor, but we believe in the long-term potential of the business. What influenced this decision was, as Jason or I mentioned in our prepared remarks, the timing. We were relying on Houlton because we felt that a conversion there could be completed more quickly. The overall softening in the housing market has provided us with more time to evaluate our capacity in the existing network. This allowed us to consider other options without the urgency we felt six months ago, leading to our focus on Mani. It is not the situation with OSB that prompted this shift.

I think your microphone just went out for a moment. And Sean, are you still with us?

I am. I'm all good guys, you can go onto the next.

The next question comes from the line of Mark Weintraub with Seaport Research Partners.

I don't know, Brad, if I should ask any more questions after that high note. But congrats to all, of course. Could you elaborate a bit more on the situation with Maniwaki Houlton? Your volumes this year aren't much different from what you expected, which suggests that you might be adopting a more cautious outlook for next year. It's still early, so could you help us understand your thought process? When you mention several quarters, does that imply that you're considering needing the volume to ramp up close to a year later than you initially planned?

Mark, the main factor driving our outlook is that we initially expected housing starts to increase at a faster rate than currently forecasted. We were anticipating the industry would add around 75,000 to 100,000 new starts annually. This led us to believe we could pursue conversion sooner rather than later. However, recent forecasts suggest that housing starts are projected to remain flat or only show low single-digit growth year-over-year. This shift in expectations has provided us with more flexibility regarding timing. It's encouraging to see Sagola performing well, which has given us some short-term cushion. We believe the reason we can afford to delay the mill conversion is because of the housing forecast aligned with our current plans. This allows us to take our time rather than rushing the process, which would likely increase capital expenses. We feel confident about having alternatives to Houlton that would be more cost-effective.

Super. And maybe could you expand a little bit on that in terms of capital efficiency, recognizing you're still in the evaluation stage, but order of magnitude, how much capital might be required for a Maniwaki conversion? And also, does this mean that your cap spend in 2026 is actually going to be more reduced than maybe what some of us would have been thinking previously?

Great questions, Mark. None of which we're really in a position to answer with sufficient reliability or confidence yet. We'll deliver more on this topic on our full year earnings call in February. Great question. Sorry, we're just not in the position to answer.

Understood. And then just last, if I could. So with the sheds business, obviously, it had been quite weak last year, much stronger this year. Can you give us any sense as to like where the sheds business, and I recon even you guys don't have perfect visibility on this, but your best estimate is where that business is now relative to kind of trend line? Or I mean, did we have some catch up this year so that there is downside risk to next year in a normal environment? Or is it more that it was just so bad last year, this really strong growth just got us back up to what you'd consider to be kind of a typical year?

Yes, I'll take that one. So what I'd say there is a fair amount of pull-forward demand in shed during COVID. So our business was very strong in those years. And to some extent, we supported that segment to a higher degree than others while we were on a managed order file. That pullback that we felt in late '23, '24, I think, was a result of that. We've seen the shed business return back to normal levels. If not, maybe a hair better. A lot of the fabricators that we talk to are saying their business is up a couple of points relative to kind of a normal rate. So we feel good about that business, and it's been very consistent for us through the years and feel good about opportunities we have to improve our share position there as well.

Next question comes from the line of Kurt Yinger with D.A. Davidson.

Congrats, Jason and Brad. I just wanted to go back to some of the comments, just around the fourth quarter Siding volumes. Can you just talk about, I mean, what you're hearing from your customers in terms of maybe a little bit of demand degradation? And then how perhaps managing inventory levels and the price increase factored in, if at all?

Yes. Thanks, Kurt. What I guess I said this earlier, but I mean the process is very consistent with what we've done in prior years. We look at historical purchases, kind of where demand is trending and then come up with allocations for our distributor partners and then obviously work with them closely through that process. If they're communicating that they're going to short a customer on the other end by no means will we hold them to that allocation specifically. So it is pretty fluid in nature with the end goal being not to increase channel inventories as we go into the new year and work through a price increase. So far, I think that's been well received. And there are customers that are certainly asking for more. But that's something that we closely manage on a week-to-week basis.

Okay. That's helpful. And then just looking forward to 2026 a little bit. I mean, what areas of the Siding portfolio do you maybe have the highest conviction or visibility to at this stage in terms of delivering kind of above-market growth and continuing the momentum? And separately, from a marketing or channel standpoint, kind of what are you most focused on there in terms of strengthening your position with different channel partners and whatnot?

Kurt, I'll take that one as well. What I would say is we've got very focused segment strategies for new construction, repair, remodel, and then off-site, which includes shed and manufactured housing segments. And those are 3 segments that we will be relentlessly focused on improving our share position. And we're investing resources in all 3 pretty equally, maybe a little bit heavier in repair/remodel. But we feel like there's an opportunity to continue to take 0.5 point to 1 point of share of the addressable market on an annual basis as we think about the future.

The next question comes from the line of Adam Baumgarten with Vertical Research Partners.

Just on ExpertFinish, can you kind of update us on where margins are there especially with the managed order file currently?

Margins are performing well, but there is still significant room for improvement under the current circumstances. We've experienced substantial price increases on ExpertFinish and are making progress on managing costs. I believe the outlook for further margin growth is positive, although it currently lags behind our main offering. This presents a promising opportunity.

Our last call comes from the line of Steven Ramsey with Thompson Research Group.

This is Kathryn Thompson on for Steven today. Answered many good questions, but I wanted to follow up just on a few on ExpertFinish and have been taking some share gains. Like I suppose for the quarter and as you think about the year, can you parse out the drivers between channel versus winning shelf space and end market demand? And then against a pretty challenging R&R market, how sustainable do you feel these market share gains are on a go-forward basis?

I'll take that one, Kathryn. So we're very pleased with the growth that we've seen in ExpertFinish after getting into the prefinished business, I think it was back in 2020. We are on a managed order file right now, but we have incremental capacity coming online at the end of Q1, early Q2 next year in the neighborhood of 50 million to 70 million feet. We believe that we've got a very strong value proposition with our ExpertFinish line, and we've only added to that with the naturals collection that was launched in April. And that repair remodel contractors really enjoy using that product. So we think the demand is sticky. Obviously, you need to get the contractor to get placement in the channel with our dealer partners. And that's really our focus going forward is getting downstream as much as possible to pull that demand through for our dealer partners.

Kathryn, I'd like to add to Jason's response by noting that our market share in that segment is small compared to the opportunity available. As our product gains acceptance and contractors start using it, and as we secure shelf space with the one-step distribution network, there is significant potential for us to continue growing the ExpertFinish line and increase our market share in the large repair and remodel market.

And do you need to step up marketing expenses next year to keep being that share gainer or are there other ways beyond to increase stickiness?

Marketing is a significant part of our strategy, focusing primarily on in-home sales to consumers. If you look at our sales and marketing budget, particularly the marketing portion, you'll see it is heavily weighted towards supporting the repair and remodel segment compared to others. However, our budgeting for next year will remain in line with our historical spending patterns, especially in relation to revenue percentages.

And since you brought up distribution, given the ongoing changes in the distribution landscape in the U.S., are you seeing any type of behavior changes for you as a supplier to the distribution market, given some of the fundamental changes in distribution?

Yes. I would say right now, we're very pleased with the partners we have from a 2-step distribution perspective and that those relationships are on very solid footing, and we look forward to continuing to work with our partners. But no real significant disruption, no.

One additional question comes from the line of Mike Roxland with Truist Securities.

I'll just echo what everybody else has said, Brad, congrats on your upcoming retirement, well deserved. And Jason, congrats on the new role. A lot of my questions have been addressed, but I just wanted to ask if you could give us some more color around volume growth by end market in terms of single-family R&R and sheds in manufactured housing in 3Q? And how should we think about Siding volume growth as you look into 2026? I know it was asked recently, but just trying to get a sense of whether you think volumes will be flat to slightly up next year versus low single digits?

I will address the first part of the question by comparing Q3 to the previous year by segment. As I mentioned earlier, shed volume dipped slightly compared to Q2 but showed an increase year-over-year, outperforming the other two segments. The repair and remodel segment was the second strongest, highlighted by our performance in the ExpertFinish line. Regarding single-family, the performance was mixed. We experienced decent volume in some of our core markets; however, in the southern markets, which are more influenced by large builders, we faced challenges related to affordability and general consumer confidence, making this segment the weakest in the quarter.

I'm going to address the second question briefly. I think it's too early for us to make a sort of convincing call on 2026. As you know, we have pretty good visibility within a quarter. And when we get to February, what we see within the first quarter behavior will, of course, color our view of 2026, at which point we'll provide some full-year guidance.

Understood. And then just one quick follow-up. If you see housing rebound more quickly next year than you're now expecting, what levers do you have available to meet that increased size now that you're pushing out some of your capital projects?

Plenty of capacity. We can add shifts in existing facilities. So yes, we will have no problem responding to almost any imaginable demand scenario over the next couple of years in either of our businesses or South America.

This does conclude the question-and-answer session. I would now like to turn the call back to Aaron for closing remarks.

Okay. Thank you, everybody, for joining the call. We'll look forward to continuing the conversation and follow-up calls later today and conferences throughout the quarter. Thank you very much.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.