Anika Dholakia

Anika Dholakia from Barclays inquired about LP's siding revenue guidance for 2026, specifically the implied step-up to $1.7 billion, and whether shed normalizing is the primary factor influencing the cadence of revenues throughout the year. She also asked about potential mix-down risks to lower-cost siding materials like vinyl due to affordability pressures and any channel-specific differences.

Answer

Alan Haughie, Chief Financial Officer, indicated expectations for improvement in shed demand and across all segments as housing normalizes. Jason Ringblom, Chief Executive Officer, acknowledged affordability as a significant headwind, noting some shift to vinyl, but emphasized LP SmartSide's value proposition and growth opportunities from its relatively low market share.

Anika Dholakia, on for Matthew Bouley at Barclays, asked about the productivity bridge, questioning why the full-year guidance implies negative base productivity despite positive signs in Q2. She also requested a performance comparison between the windows and doors categories, including any differences in mix-down or tariff impacts.

Answer

CFO Samantha Stoddard explained that the negative 'base productivity' in the full-year guidance reflects volume deleverage from lower capacity utilization, which is partially offset by positive productivity from specific transformation and cost actions. Regarding product categories, Stoddard stated that performance and tariff impacts are consistent between windows and doors. She noted that the significant mix-down occurred in 2024 and is not worsening in 2025, with current pressure being almost entirely volume-related.

Anika Dholakia, on behalf of Matt Bouley at Barclays PLC, asked for a breakdown of the volume versus mix headwind in Q1, the risk of further customer mix-down, and the expected timing for the $30 million tariff impact to flow through results.

Answer

CFO Samantha Stoddard clarified that the significant product mix-down occurred in 2024 and has since stabilized at that lower level. Therefore, the Q1 revenue pressure was 'truly volume' driven. Regarding tariffs, she stated the company intends to pass through the costs, with an insignificant timing lag in Q2, and expects the impact of surcharges to begin in Q2 and continue through the year.

Anika Dholakia, on for Matthew Bouley, asked about the drivers of the flat pricing environment, questioning whether commodity or finished goods performance was better than expected. She also inquired about any pull-forward buying activity during the quarter.

Answer

CFO Bill Brundage detailed that finished goods pricing was up low-single digits while commodities were down mid-single digits, with commodity performance slightly better than anticipated. CEO Kevin Murphy stated that while there may have been some pull-forward buying due to tariff talk, its impact on Q3 results was not material.

Anika Dholakia, on for Matt Bouley, asked for early thoughts on the demand outlook for 2026. She also inquired about the strategy for further acquisitions in the automatic cover space and the current consumer appetite for these products.

Answer

CEO Scott Rajeski stated that it is too early to provide a 2026 outlook but emphasized the company's ability to outperform the market through its strategic initiatives. He confirmed that recent Coverstar acquisitions are integrating well and that the partnership with Bode Miller is aimed at driving awareness for autocovers, which are seeing high attachment rates in certain markets.

Anika Dholakia asked for clarification on the full-year guidance, specifically how the new assumption of a 17% volume decline in the second half compares to prior assumptions and what potential upsides are offsetting this weakness. She also inquired about the company's long-term sourcing strategy beyond 2025.

Answer

CFO Rocky Kraft clarified that the initial guide assumed a 1% market volume decline, while the reiterated guidance now conservatively assumes a 17% decline in the second half due to tariff impacts. President and CEO Jon Michael Adinolfi added that Hillman aims to reduce its China sourcing to 20% by year-end and will continue diversifying into Southeast Asia and India, building on a pre-existing strategy.

Anika Dholakia, on for Matthew Bouley, asked if the incremental $20 million in cost savings is structural or variable, and inquired about M&A priorities and the company's comfort level with leverage.

Answer

CEO John Turner estimated the savings are about half structural and half volume-related, with the variable portion to be added back cautiously as demand recovers. He and CFO Scott Deakin reiterated a leverage target of 1.5x-2.5x, noting they are currently at the high end. They plan to temper share repurchases in favor of debt paydown to create capacity for strategic M&A, with a continued focus on complementary products like EIFS, stucco, and insulation.