BlueLinx Holdings Inc. (BXC) 2026 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Bluelinx Holdings Second Quarter 2026 Earnings Conference Call.(Operator Instructions) I would like to turn the conference over to your host, Investor Relations Officer Thomas Morabito. Please go ahead.

Thank you, operator, and welcome to the Bluelinx Second Quarter 2026 Earnings Call.

Joining me on today's call is Sham Reddy, our Chief Executive Officer, and Kelly Wall, our Chief Financial Officer and Treasurer. At the end of today's prepared remarks, we will take questions.

Our second quarter news release and Form 10-Q were issued yesterday after the close of the market, along with our webcast presentation, and these items are available in the Investors 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 will turn it over to Shan.

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 are 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 Distero 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 SKU-wise with strategic suppliers. Engineered wood, siding, millwork, 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 is what we are 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 have also expanded our geographic footprint faster than before with key suppliers like Huber, Louisiana Pacific, Georgia Pacific, Royal Westlake 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 Blue Links 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. Distaro, 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 builder 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 drove 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 in supporting our customers' commercial objectives.

we are 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 have also dealt with approximately 60 cost increases from suppliers through Q2 2026 compared to around 2020 through Q2 2025, yet we 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 cycle and positioning Bluelinx 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 will turn it over to Kelly, who will provide more details on our financial results and our capital structure.

Thanks, Shan, and good morning, everyone.

Let us 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 Disdero 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 remain 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 discrete items. Adjusted EBITDA was $35.6 million, up approximately 33% from the second quarter of 2025 due to the benefit of the duty-related item, increased sales, including Disdero, 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 now to 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 Sarah 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.

Specialty gross margin was 20%, up from last year's 18.5%. Excluding the $7.2 million duty-related item in Q2 of 2026, specialty gross margin was still up 20 basis points from last year to 18.7%. Sequentially, specialty 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 in panels. Gross profit from 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 2026. When considering our cash on hand and undrawn revolver capacity of $337 million, 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.

During the second quarter, we repurchased $2 million of our common shares and as of 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 Disdero, 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.

(Operator Instructions) Reuben Garner, Benchmark Company.

Thanks. Good morning, everyone, and congrats on the strong results, guys.

Maybe to start the TREX announcement last month or a couple weeks ago, any way to frame up the size of your decking business before this and where do you think that this could go now that you have access to obviously the leader in the space?

Yeah, so appreciate the question.

it is too early to say to frame up. we have 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 have 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.

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 is great. And then the gross margin performance.

Very impressive and encouraging in the environment. I guess, can you just walk through how you are handling this? You mentioned 60 vendor increases. There is obviously been transportation and energy costs rising. Like what is allowed you guys specifically to kind of work through all that?

Is it pricing action, surcharges, are there costs that you have taken out that have helped offset this? Just walk through kind of what is 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. Are 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. That is 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 are 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. That the seamless execution by having people work together efficiently and effectively make for a good operating model when passing cost increases through. But look, at the end of the day, Reuben, the most important thing is.

You have to be able to sell value, right? You can not 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 are all facing. So suffice it to say, if you look at the landscape out there, I would. That 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.

The other component there is what we have seen on the structural side, right, at a 10.9% gross margin in the quarter, that is up materially from prior periods. And as we talked about in the first quarter call, we have seen an increase in that market pricing for both lumber and panels that we have benefited from quite well as not only are we pricing effectively there, but we are managing our inventory so that we have supply available in the market to meet our customers. Demands there as they are coming to us for more volumes.

And then you can just kind of reiterate Sham 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 through the use of data. And better tools, we are 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 are bringing to the market. It effectively.

Great, 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 is 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 is 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 exposure to new housing construction, are kind of a little more modest in the back half. So just talk about what is driving that for you guys?

Yeah, what we are seeing is total revenue would be down from would be up, you are right, from Q2 to Q3. And again, I think it is just as we continue to execute our strategies, we are driving volume growth certainly relative to the overall market, but also back on the pricing front as we continue to price more effectively, that is 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 is 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 moving forward.

Great, thanks. Congrats again on the results and the news with Trex and good luck going forward.

Jeffrey Stevenson, Loop Capital.

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 what product categories in particular came in better than worse than anticipated. Then following up on Reuben question, both average daily sales volumes are expected to be up both year over year and sequentially. Is this really driven by your share gain initiatives, helping you drive. Above market growth given continued residential demand headwinds.

Yeah, let me take the first part of the question, So from a category standpoint, we saw pressure in millwork volumes, which is not surprising given tepid R&R activity as well as panels, which has been 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, 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 am confident that our teams can execute successfully on getting more and more of the pie because of the strategic approach we are 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, we have talked about growing from 0 to 20 plus markets with LP in 18 to 20 months. we have gone national with Georgia Pacific as it relates to key product lines that support the multifamily business. we have expanded substantially with Huber in multiple markets in a very short period of time. We launched with TrueXterior in 14 markets at once, Trex in 11 markets. Generally speaking, if you look at historic trends, it is rare that you can expand in double-digit markets all at once with key suppliers in a relatively short time.

I would say that our commercial is our our channel strategy is what is driving that accelerated geographic and (Skew) expansion with respect to key product lines and our suppliers. So at the end of the day, 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, the e-commerce and AI are all serving as amplification or accelerants to the general business efforts that are underway.

Yeah, and Reuben, more specifically about what we are seeing in kind of the current quarter, sorry, Jeff, what we are seeing here in the current quarter.

Year-over-year volumes are up for both specialty and structural and low single-digits. And on the pricing front, same thing, right, we are seeing specialty pricing up low single-digits and then structural is actually up kind of in the mid-teens level. Then sequentially, we are continuing to expect overall volumes.

While they are down slightly at the beginning of the quarter, we are seeing that trend reverse out and we expect that the overall trends will be slightly positive sequentially from Q3 to Q4. And I guess as a reminder, typically we have I am sorry, from Q2 to Q3 and then as a reminder, typically our Q third quarter is higher, right, seasonally than Q2 and we do not have any reasons to expect that that would change. And as I look at some of the specific categories on the volume. Front, all of our categories are up flat to up, some of them kind of high single-digits in certain categories, again, across both specialty and structural as we start the third quarter here.

Thanks for all the details, very helpful, so I appreciate that.

One category, where you have seen deflation pressure over the last kind of one to two years has been EWP and then wondered if you could update on the competitive environment there and your competitor talked kind of third quarter price increases. I just wondered, should we expect pricing to stabilize and inflect higher in that category?

The competitive landscape has not changed per se, but where I would emphasize our strength is on margin and volume growth due to the builder pull-through programs that we have established with key channel partners to drive growth and participate more.

Participate more opportunistically across the country. So that is 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. I would say that it is because of the value-add services we are providing that justify the price maintenance by and large relative to maybe others out there. So look, at the end of the day, it is a very competitive environment. There are products coming in from overseas, for example, LVL, Euro LVL that puts pricing pressure on local market, 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 is helpful, Sham. And then last one for me, just SG&A stepped up sequentially due to the Disdero acquisition and higher fuel and third-party freight costs among others. And should we expect this to be a run rate moving forward or just kind of any 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 would expect each quarter to be kind of at $100 million to $105 million, with the middle two quarters being higher and in Q1 and Q4 being lower. We came in at $107 million in Q2. Again, higher fuel costs, freight costs, higher employee costs as well relative to our original.

And tied to our overperformance and our compensation structure internally are limiting that as well as higher healthcare costs, which is a trend that we are continuing to see. So as we kind of carry that forward into the back half of the year, what I would tell you, Jeff, is that we would expect to average about $105 million in SG&A for both quarters with Q3 being slightly higher than Q4, which is the typical trend you see seasonal.

And I would also like to point out we do not want. We do not talk about, we do not give formal breakdowns per s(ay), but 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 have employed in order to. Drive growth and gain share, all of the above have increased or out of warehouse volumes, which obviously drive up SG&A costs at the warehouse level. So on the one hand, the SG&A costs are higher, there is just a commensurate increase to the disproportionate growth out of warehouse with respect to volumes when compared to.

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.

Thank you.

Kurt Yinger, DA Davidson.

Great, thanks, and good morning, everyone.

You had mentioned a couple examples, right, of vendor relationships that you would expanded pretty quickly. I am just curious in the context of trucks, like what is kind of the timeline or... Kind of progression that you would expect ramping up to a reasonably sized base of business or kind of initial expectations for run rate contributions?

Yeah, so again, it is 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 Bluelinx.

We are moving very quickly with POs being issued by the end of this week and product being loaded in this month and with sales and profit hitting the 26 P&L in Q3, Q4, but ultimately, it is going to take time to ramp up as we go out and we convert business. Fortunately, with Trex, it is an incredibly well-branded product that is sold in all these markets and given how we execute, I am confident we will be able to not only execute quickly but convert quickly, but it is really a 2027 impact as it will take time for us to really get known in the marketplace. Like I said, we are a new supplier, a new distribution partner for Trex. And after 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 have said it over and over again.

I believe in our team's ability to execute to a point where we are 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 not give you specifics yet because obviously we are only a few weeks in, but I mean, again, we are issuing POs and loading product in very quickly and we will be on our road to a long-term partnership with Trex, which I am really excited about.

Okay, that is helpful. But I mean, 2027 is probably when this becomes more of a conversation in terms of what is flowing through the P&L at least.

That is right. I mean, just in the early days, right, we will have a significant working capital investment. Then we will, we have general views around turn days and obviously return on working capital.

But like I said, I mean, it is going to take time, so there will be some investments upfront, but look at 2027 as a real year of execution. Quite frankly, I think it is that Trex 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 have got a head start, and that is , as a new partner, that is a great place to be.

Yes, agreed. Okay.

And I apologize. This is going to be probably maybe an impossible question, but I will ask it anyways.

When you think about. These, larger vendors with kind of strict dual distribution models, is there a rule of thumb in terms of, distributor A, distributor B, kind of general market share, or is it, I guess really market dependent?

it is all about local market execution, right?

Our supplier partners are not going to go with they are only going to go with distributors in markets who they believe can help grow their overall business, who can take their full capacity across the entire country or where they are otherwise serving and make sure they have the right distribution partners to go execute on their sales growth strategies, quite frankly, because we are essentially an extension of their business, we can 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 is really head-to-head competition with our competitors and where we compete there is around value-add services. We do, for example, take-off services or innovative programs and mixed. For example, we are trying to go up into the right as it relates to our structural specialty mix, we are 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. We provide whether it is bundling of various products and having creative pricing around those bundled product offerings to help our suppliers compete against their competitors who might carry multiple product lines,

That is how we win at the local market level. So I do not think it is A, B, C or D (per se), it is really they have got their partners and then we are out in the market competing on value and I think our results show that we are 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 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, 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. 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 is great color. And I mean, maybe the last part answers this next question, but, what are kind of the primary second order effects. With what I will call it kind of upgrading the vendor base, right? I mean, does that help you maybe attract another vendor in a different category that you are been pursuing or open the door to new kind of dealer partners? Just beyond these wins in isolation, can you just talk about kind of what that means for the Blue Ink platform?

Yeah, the answer is yes, absolutely, It validates not only our strategy, but it strengthens our value proposition via brand association, top-tier brand association, and then as you think about programs that are out there, I am sorry, if you think about how big builders. And other builders build, whether it is they are building 15 to 20 homes or they are 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, Trex, Huber, Roseburg and Georgia Pacific and so on, what that does is people want to be with winners, right, suppliers want to be with winners and we are winning and it will continue and by the way, as we look at, for example, the true exterior rollout with Royal Westlake, that is another example, so these it is just wins to get more wins. And then they take us further down the road of serving the whole house needs of our customers' customers. And if we can do that and continue to do it well, then obviously it will enable more greater dealer business and national accounts business and lumberyard business and so on at the local, regional and national level.

Perfect. Okay, that makes sense. Just lastly, from an internal perspective, what type of investments or kind of human capital, what are kind of the focus areas at kind of that rollout, right? Do you need to add, specific salespeople, things like that? Is that something to be aware of from kind of a spend perspective? 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. 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 is 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, what is great about it is they have had its existing distribution relationships in those 11 markets that we can baseline against in order to kind of set the mark from a growth perspective.

But the answer is, yes, we will hire where it makes, Outdoor living specialists who will be focused on the Trex product lines. We will also have, we will make investments with our own teams as it relates to significant training to make sure they are up to speed on those product lines in collaboration with Trex. we will be sending dozens of people to the 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 yes, 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 will also leverage the product management team and the category specialist we have in Atlanta, which is a shared resource who will work directly with on-the-ground resources to accelerate sales being driven by not only the product managers, but our territory managers who have very strong customer relationships in the field.

Great. Okay. I appreciate all the color.

Thank you.

That concludes our Q&A session. I will now turn the call back over to Tom Morabito 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.