What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-05 compared with 2025-11-04 · 132 added, 182 removed, 154 unchanged (67% of the section changed)

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our ability to generate profits and cash from sales of specialty products;

our ability to effectively manage inventory;

our ability to successfully integrate the operations of Disdero;

or ability to effectively manage inventory;

our ability to manage our lease commitments;

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and whether or not the Company will continue any share repurchases.

These risks and uncertainties also include those discussed under the heading “Risk Factors” in Part II, Item 1A of this Form 10-Q, under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 28, 2024, as supplemented in Part II, Item 1A, “Risk Factors,” in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2025, and those risks and uncertainties discussed elsewhere in this Form 10-Q, and in future reports that we file with the SEC.

These risks and uncertainties also include those discussed under the heading “Risk Factors” in Part II, Item 1A of this Form 10-Q, under the heading “Risk Factors” in Part I, Item 1A of our 2025 Form 10-K, and those risks and uncertainties discussed elsewhere in this Form 10-Q, and in future reports that we file with the SEC.

We operate in a changing environment in which new risks can emerge from time to time.

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We expressly disclaim any obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.

The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information included in this Form 10-Q and in our Annual Report on Form 10-K for fiscal year 2024.

In addition to historical information, the following discussion and other parts of this Form 10-Q contain forward-looking information that involves risks and uncertainties.

Our actual results could differ materially from those anticipated by this forward-looking information due to the factors discussed under Part II, Item 1A “Risk Factors” in this Form 10-Q, under Part I, Item 1A “Risk Factors” in our Form 10-K for fiscal 2024, and under “Cautionary Statement Concerning Forward-Looking Statements” in Item 2 of this Form 10-Q.

Our actual results could differ materially from those anticipated by this forward-looking information due to the factors discussed under Part II, Item 1A, Risk Factors, in this Form 10-Q and under Part I, Item 1A, Risk Factors, in our 2025 Form 10-K.

We remain committed to driving a culture of profitable growth within new and existing product lines and geographies, while positioning the Company for long-term value creation.

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Grow our higher-margin specialty product categories.

We continue to pursue a revenue mix weighted toward higher-margin, specialty product categories such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products.

We continue to pursue a revenue mix weighted towards higher-margin, specialty product categories such as engineered wood products, siding, millwork, outdoor living products, specialty lumber and panels, and industrial products.

Additionally, we are expanding our value-added service offerings designed to simplify complex customer sourcing requirements.

Our acquisition of Disdero in the fourth quarter of fiscal 2025 enhanced our revenue mix by adding a significant number of new lines of premium specialty building materials, including decking, trim, flooring, paneling, posts, timbers, siding, and stepping, to our product offerings.

Increase share gain in local and national markets.

We continue to pursue multi-family project growth, expand our product lines with key national accounts, expand branded product lines into new geographic markets, and launch new product lines.

With our expanded product categories, and our strategic vendor relationships, we seek to be an extension of our customers’ business in a scalable way.

With our expanded product categories, and our strategic vendor relationships, we seek to be a better extension of our customers’ business in a scalable way.

Foster a performance-driven culture committed to business excellence and profitable growth to be the provider of choice for both suppliers and customers.

We seek to improve the customer experience through enhanced tools, value-added services, and technology enablement, accelerating organic growth within specific product and solutions offerings where we are uniquely advantaged, increase our performance by leveraging our scale and national footprint together with pricing, operational and procurement capabilities, and deploy capital to drive sustained margin expansion, grow cash flow and maintain continued profitable growth.

Maintain a disciplined capital structure and pursue strategic investments that increase the value of the Company.

increase our performance by leveraging our scale and national footprint together with pricing, operational and procurement capabilities, and deploy capital to drive sustained margin expansion, grow cash flow and maintain continued profitable growth.

Maintain a disciplined capital structure and pursue strategic investments that increase the value of our Company.

We continue to strategically target acquisition opportunities that grow our higher-margin specialty products business, expand our geographic reach, or complement our existing capabilities.

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We further seek to maintain a disciplined capital structure while at the same time investing in our business to modernize our distribution facilities, as well as our tractor and trailer fleet, and to improve operational performance.

During the nine fiscal months ended September 27, 2025, we:

• Used cash of $21.5 million and entered into $41.3 million of finance leases to enhance our facilities and fleet.

During the fiscal three months ended April 4, 2026, we:

• Used cash of $2.6 million to enhance our facilities, fleet, and technology hardware.

• Returned capital of $3.0 million to our shareholders by using cash to purchase 59,051 shares of our common stock at an average price of $50.83, excluding broker commissions and excise tax.

Between April 4, 2026 and April 21, 2026, we repurchased an additional 36,749 shares of our common stock at an average price of $54.43 per share excluding broker commissions and excise tax, for a total of $2.0 million.

Business and Digital Transformation

We have initiated a series of business and digital transformation actions focused on redesigning and optimizing key elements of our operating model to improve efficiency, execution, and operating leverage.

These actions include business process‑driven initiatives and targeted digital investments intended to simplify operations, reduce complexity, and increase consistency across the enterprise.

We have focused on improving organizational efficiency across corporate functions and field operations through process redesign, role clarity, increased standardization, and productivity improvements.

In parallel, we are modernizing our logistics and commercial operating capabilities, including the implementation of an enterprise transportation management platform and the use of advanced analytics and artificial intelligence to enhance decision‑making, support optimization across pricing, procurement, and logistics, and improve inventory management and collections efficiency.

Collectively, these actions are intended to improve execution consistency, enhance margin performance, strengthen operating leverage, and improve our ability to perform across cyclical market conditions.

Our Culture and Values

Our culture is guided by our values:

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• Collaboration - We collaborate with each other and our customers to build great teams and construct innovative solutions.

Acquisition of Disdero

During the fourth quarter of fiscal 2025, we acquired Disdero Lumber Co.

LLC (“Disdero”), a value-added distributor focusing on premium specialty building materials, including decking, trim, flooring, paneling, posts, timbers, siding, and stepping.

Disdero’s products are used primarily in the construction of high-end, custom homes and decks, as well as upscale multi-family residential and commercial projects.

The acquisition of Disdero was funded with cash on hand.

Disdero is based near Portland, Oregon and began operations in 1953.

We expect the acquisition of Disdero to strengthen and expand our offerings for premium specialty products, which typically have higher profit margins, and increase our market penetration in the Pacific Northwest.

We plan to operate Disdero under its established brand name for the foreseeable future.

Factors That Affect Our Operating Results and Trends

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escalating changes in retaliatory trade policies of the United States and other countries;

disintermediation risk;

our dependence on international suppliers and manufacturers for certain products and related exposure to risks of new or increased tariffs and other risks that could affect our financial condition;

pricing and product cost variability;

disintermediation risk;

volumes of product sold;

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changes in our product mix;

increases in fuel and other energy prices or availability of third-part freight providers;

increases in fuel

and other energy prices, including as a result of disruptions in international shipping of oil and gas through the Strait of Hormuz and the ongoing conflicts in the Middle East and Ukraine, or availability of third part freight providers;

changes in insurance-related deductible/retention liabilities based on actual loss development experience;

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interest rate risk, which could cause our debt service obligations to increase;

in, or interpretation of, accounting principles.

and changes in, or interpretation of, accounting principles.

These factors, and the related trends and uncertainties, have historically produced cyclicality in our results of operations, and we expect this cyclicality to continue in future periods.

For more information on the risk factors impacting our business, refer to Part II, Item 1A, Risk Factors , in this Form 10-Q and to Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year 2024, as supplemented in Part II, Item 1A, “Risk Factors,” in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2025.

For more information on the risk factors impacting our business, refer to Part II, Item 1A, Risk Factors , in this Form 10-Q and to Part I, Item 1A, Risk Factors, in our 2025 Form 10-K.

Results of Operations

Our results of operations for the three fiscal months ended September 27, 2025 (“third quarter of fiscal 2025”) and for the three fiscal months ended September 28, 2024 (“third quarter of fiscal 2024”) were as follows:

Three Fiscal Months Ended September 27, 2025 % of

Sales Three Fiscal Months Ended September 28, 2024 % of

Our results of operations for the fiscal three months ended April 4, 2026 (“fiscal first quarter of 2026” or “current year period” or “current year quarter”) and for the fiscal three months ended March 29, 2025 (“fiscal first quarter of 2025” or “prior year period” or “prior year quarter”) were as follows:

Fiscal Three Months Ended April 4, 2026 % of

Sales Fiscal Three Months Ended March 29, 2025 % of

($ amounts in thousands)

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Depreciation and amortization 11,974 1.6% 9,554 1.3%

Amortization of deferred gains on real estate (984) (0.1)% (984) (0.1)%

Realization of deferred gains on real estate (984) (0.1)% (984) (0.1)%

Other operating, net 1,875 0.3% (2,258) (0.3)%

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Interest expense, net 9,147 1.3% 6,580 0.9%

Settlement of defined benefit pension plan — —% (2,226) (0.3)%

Income before provision for income taxes (1,819) (0.2)% 4,144 0.6%

(Benefit) provision for income taxes (361) 0.0% 1,339 0.2%

Net income $ 1,655 0.2% $ 16,016 2.1%

Our results of operations for the nine fiscal months ended September 27, 2025 (“first nine months of fiscal 2025”) and for the nine fiscal months ended September 28, 2024 (“first nine months of fiscal 2024”) were as follows:

Nine Fiscal Months Ended September 27, 2025 % of

Sales Nine Fiscal Months Ended September 28, 2024 % of

($ amounts in thousands)

Net sales $ 2,238,203 $ 2,241,895

Gross profit 339,005 15.1% 375,794 16.8%

Selling, general, and administrative 278,639 12.4% 272,913 12.2%

Depreciation and amortization 29,086 1.3% 29,083 1.3%

Amortization of deferred gains on real estate (2,951) (0.1)% (2,952) (0.1)%

Other operating, net (1,494) (0.1)% 1,210 0.1%

Operating income 35,725 1.6% 75,540 3.4%

Interest expense, net 23,640 1.1% 14,044 0.6%

Settlement of defined benefit pension plan — —% (2,226) (0.1)%

Income before provision for income taxes 12,085 0.5% 63,722 2.8%

Provision for income taxes 3,315 0.1% 15,878 0.7%

Net income $ 8,770 0.4% $ 47,844 2.1%

Net (loss) income $ (1,458) (0.2)% $ 2,805 0.4%

The following table sets forth Net sales by product category and percentage of total Net sales by product category:

Three Fiscal Months Ended Nine Fiscal Months Ended

September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024

Net sales by product category:

Fiscal Three Months Ended

April 4, 2026 March 29, 2025

($ amounts in thousands)

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The following table sets forth Gross profit, the percentage of total Gross profit earned by product category, and gross margin percentages by product category:

Three Fiscal Months Ended Nine Fiscal Months Ended

September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024

Gross profit by product category:

Fiscal Three Months Ended

April 4, 2026 March 29, 2025

Gross profit:

($ amounts in thousands)

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Total Gross profit $ 116,397 100 % $ 111,129 100 %

Gross margin % by product category:

Gross margin %:

Specialty products 18.1% 18.7%

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Company gross margin % 15.9% 15.7%

Third Quarter of Fiscal 2025 Compared to Third Quarter of Fiscal 2024

For the third quarter of fiscal 2025, the Company’s net sales were $748.9 million, an increase of $1.6 million, or 0.2%, compared to the third quarter of fiscal 2024.

• The overall $1.6 million increase in the Company’s net sales in the current fiscal quarter was attributable to specialty products, partially offset by lower net sales for structural products.

• Approximately 70% and 69% of the Company’s net sales in the third quarters of fiscal 2025 and the third quarter of fiscal 2024, respectively, were generated by specialty products.

The Company’s gross profit for the third quarter of fiscal 2025 decreased by $17.5 million, or 13.9%, to $108.2 million from $125.7 million in the third quarter of fiscal 2024.

• The decrease in the Company’s gross profit in the current fiscal quarter was attributable to both specialty products and structural products.

• Approximately 81% of the Company’s gross profit was generated by specialty products in the third quarter of fiscal 2025, compared to 80% in the third quarter of fiscal 2024.

• Gross margin percentage for the Company decreased from 16.8% to 14.4% in the current fiscal quarter.

The decrease was attributable to both specialty products and structural products.

• Cost of products sold for the third quarter of fiscal 2025 included an additional $2.2 million of cost related to retroactive adjustments associated with antidumping/countervailing (“AD/CV”) duties for certain imported specialty products.

For the third quarter of fiscal 2024, retroactive import duty-related items resulted in a net benefit to Cost of products sold of $3.5 million.

These items impacted the results of operations for specialty products.

See Note 2, Inventory, and Note 8, Commitments and Contingencies , to the accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

• The Company’s gross profit and gross margin percentage for the third quarter of fiscal 2024 were positively impacted by $2.4 million for a LCNRV provision for certain structural products that occurred in the second quarter of fiscal 2024.

This provision in the second quarter of fiscal 2024 lowered Cost of products sold in the subsequent third quarter of fiscal 2024 since substantially all of the inventory associated with the LCNRV write-down was sold during the third quarter of fiscal 2024.

Such adjustments were not material to the third quarter of fiscal 2025.

See Note 2, Inventory , to the accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

• The LCNRV impact and the retroactive adjustments associated with import duty-related items discussed in the two preceding bullet points caused the Company’s gross margin percentage to decrease from 14.7% to 14.4% for the third quarter of fiscal 2025, and to increase from 16.0% to 16.8% for the third quarter of 2024.

Specialty products - Net sales of specialty products, which include product types such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products, increased by $6.5 million, or 1.2%, to $525.5 million in the third quarter of fiscal 2025.

• The increase in net sales for specialty products in the current fiscal quarter was due primarily to higher volume for engineered wood and higher pricing for most product categories, partially offset by lower pricing for engineered wood.

• Specialty products’ gross profit decreased by $13.1 million, or 13.1%, to $87.4 million in the current fiscal quarter due primarily to a competitive pricing environment, particularly for engineered wood.

• Specialty products’ gross margin percentage decreased by 280 basis points to 16.6% compared to 19.4% in the third quarter of fiscal 2024 due primarily to a competitive pricing environment, especially for engineered wood.

• For specialty products’ gross margin percentage, the aforementioned adjustments for import duty-related items reduced the percentage from 17.0% to 16.6% for the third quarter of fiscal 2025, and increased it from 18.7% to 19.4% for the third quarter of fiscal 2024.

Structural products - Net sales of structural products, which include product types such as lumber, panels (including plywood and oriented strand board), rebar, and remesh, decreased by $4.9 million, or 2.1%, to $223.4 million in the third quarter of fiscal 2025 compared to $228.3 million in the third quarter of fiscal 2024.

• This overall decrease in net sales for structural products in the current fiscal quarter was due primarily to lower volume for lumber and panels and lower pricing for panels, partially offset by higher pricing for lumber.

Lumber and panel pricing were driven by external market factors.

• Compared to the third quarter of 2024, average commodity prices in U.S.

markets during the third quarter of 2025 for lumber were up 6.5% and down 14.1% for panels.

• Structural products’ gross profit decreased overall by $4.4 million, or 17.3%, to $20.8 million in the third quarter of fiscal 2025 from $25.2 million in the third quarter of fiscal 2024.

Lower volume was partially offset by overall higher pricing.

• Structural products’ gross margin percentage for the third quarter of fiscal 2025 was 9.3% compared to 11.0% in the third quarter of fiscal 2024.

• The aforementioned LCNRV adjustment increased the gross margin percentage for structural products by 1.0% in the third quarter of fiscal 2024.

LCNRV impacts were not material for the third quarter of fiscal 2025.

Our selling, general, and administrative (“SG&A”) expenses decreased by $2.9 million, or 3.2%, compared to the third quarter of fiscal 2024.

This overall decrease was due primarily to lower incentive compensation expense in the current period, partially offset by increased sales and logistics expenses driven by our strategy to grow sales in the multi-family channel, expenses associated with our digital transformation initiative, and merit salary increases in early fiscal 2025.

Interest expense, net, which includes gross interest expense less interest income, was $8.6 million and $4.6 million in the third quarter of fiscal 2025 and third quarter of fiscal 2024, respectively, resulting in an increase in net interest expense of $4.0 million in the current fiscal quarter.

• Gross interest expense was $12.5 million and $11.7 million in the third quarter of fiscal 2025 and third quarter of fiscal 2024, respectively.

The additional interest expense in the current fiscal quarter was due primarily to additional net finance leases added subsequent to the third quarter of fiscal 2024.

• Interest income was $3.9 million and $7.0 million in the third quarter of fiscal 2025 and third quarter of fiscal 2024, respectively.

Fiscal First Quarter of 2026 Compared to Fiscal First Quarter of 2025

For the fiscal first quarter of 2026, the Company’s Net sales were $731.1 million, an increase of $21.9 million, or 3.1%, compared to the fiscal first quarter of 2025.

• The $21.9 million overall increase in the Company’s Net sales in the current fiscal quarter was attributable to specialty products, partially offset by lower Net sales for structural products.

Combined, overall strong volume gains offset decreases in pricing.

• The current year period includes the Net sales for Disdero.

We acquired Disdero in fiscal fourth quarter of 2025.

• Approximately 70% and 68% of the Company’s Net sales in the fiscal first quarters of 2026 and 2025, respectively, were generated by specialty products.

The Company’s Gross profit for the fiscal first quarter of 2026 increased by $5.3 million, or 4.7%, to $116.4 million from $111.1 million in the fiscal first quarter of 2025.

• The increase in the Company’s Gross profit in the current fiscal quarter was attributable to both specialty products and structural products.

• The current year period includes the results of Disdero, which contributed to Gross profit.

• Approximately 80% of the Company’s Gross profit was generated by specialty products in the fiscal first quarter of 2026, compared to 81% in the fiscal first quarter of 2025.

• The Company’s gross margin percentage increased from 15.7% to 15.9% in the current fiscal quarter.

Disdero increased the Company’s gross margin percentage in the current period.

The import duty-related item described below increased the Company’s gross margin percentage by 40 basis points for the prior year period.

• Cost of products sold for the fiscal first quarter of 2025 included a benefit of $2.4 million related to retroactive adjustments associated with antidumping/countervailing (“AD/CV”) duties for certain imported specialty products.

See Note 3, Inventory, to the accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Specialty products - Net sales of specialty products, which include product types such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products, increased by $32.4 million, or 6.8%, to $511.8 million in the fiscal first quarter of 2026.

• The increase in Net sales for specialty products in the current fiscal quarter was due to higher volumes for all product categories, partially offset by slightly lower pricing for most product categories due to a continuing competitive pricing environment.

• The current year period also includes the Net sales for Disdero.

• Specialty products’ Gross profit increased by $2.8 million, or 3.1%, to $92.6 million in the current fiscal quarter due to strong volume gains that exceeded the pricing decreases.

The current year period includes the results for Disdero, which contributed to Gross profit.

• Specialty products’ gross margin percentage decreased by 60 basis points to 18.1% compared to 18.7% in the fiscal first quarter of 2025.

Disdero increased the gross margin percentage in the current quarter.

The prior year period benefited from the $2.4 million duty-related refund described above, which increased the gross margin percentage for specialty products in the prior year period by 50 basis points.

Structural products - Net sales of structural products, which include product types such as lumber, panels (including plywood and oriented strand board), rebar, and remesh, decreased by $10.5 million, or 4.6%, to $219.3 million in the fiscal first quarter of 2026 compared to $229.8 million in the fiscal first quarter of 2025.

• This overall decrease in Net sales for structural products in the current fiscal quarter was due to lower pricing for panels and lumber, partially offset by volume gains for lumber.

• Compared to the first quarter of 2025, average commodity prices in U.S.

markets during the first quarter of 2026 for lumber were down approximately 4% and down approximately 14% for panels.

• Structural products’ Gross profit increased overall by $2.5 million, or 11.6%, to $23.8 million in the fiscal first quarter of 2026 from $21.4 million in the fiscal first quarter of 2025 due to margin expansion for both lumber and panels accompanied by higher Net sales for lumber.

• Structural products’ gross margin percentage for the fiscal first quarter of 2026 was 10.9% compared to 9.3% in the fiscal first quarter of 2025.

Our Selling, general, and administrative (“SG&A”) expenses increased by $2.1 million, or 2.2%, compared to the fiscal first quarter of 2025.

This overall increase was due primarily to Disdero.

The overall increase in the current quarter was partially offset by a benefit of $1.9 million for insurance proceeds received for business interruptions at our Erwin, Tennessee owned

facility that was damaged in the third quarter of 2024 by Hurricane Helene.

Depreciation and amortization expense increased by $2.4 million, or 25.3%, compared to the fiscal first quarter of 2025 due to a higher base of depreciable assets, including the property, equipment, and finite-lived intangible assets from the Disdero acquisition.

Other operating, net for the fiscal first quarter of 2026 was $1.9 million and composed mainly of severance expenses and professional services fees related to our business and digital transformation initiatives.

For the fiscal first quarter of 2025, we settled certain of the initial insurance claims related to property and equipment that was damaged or destroyed at our Erwin, Tennessee owned facility in 2024 due to Hurricane Helene.

We received insurance proceeds that exceeded the carrying values of the damaged or destroyed property and equipment by $2.4 million.

Interest expense, net, which includes gross interest expense less gross interest income, was $9.1 million and $6.6 million in the fiscal first quarter of 2026 and fiscal first quarter of 2025, respectively, resulting in an increase in net interest expense of $2.6 million in the current fiscal quarter.

• Gross interest expense was $12.2 million and $12.1 million in the fiscal first quarter of 2026 and fiscal first quarter of 2025, respectively.

• Gross interest income was $3.1 million and $5.5 million in the fiscal first quarter of 2026 and fiscal first quarter of 2025, respectively.

This decrease in the current fiscal quarter was due to lower average balances for interest-bearing deposits of cash/cash equivalents and due to lower interest rates paid on those deposits in the current fiscal quarter.

Additionally, interest income for the third quarter of fiscal 2024 included $0.7 million on refunds from U.S.

Additionally, interest income for the fiscal first quarter of 2025 included $0.5 million on refunds from U.S.

Customs for AD/CV import duties.

For fiscal 2025, we currently estimate our annual effective income tax rate will be approximately 29% .

Our effective income tax rates were (21.4)% and 26.0% for the third quarters of fiscal 2025 and fiscal 2024, respectively.

Our effective income tax rate for the third quarter of fiscal 2025 was increased by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the anticipated return-to-provision adjustments for the 2024 federal income tax return.

These increases were offset by a benefit from settlements of stock-based compensation grants, resulting in a net income tax benefit for the fiscal period.

Our effective income tax rate for the third quarter of fiscal 2024 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, partially offset by a partial release of a valuation allowance for deferred income tax assets, and the vesting of restricted stock units.

On July 4, 2025, the law formally titled “An Act to Provide for the Reconciliation Pursuant to Title II of H.

14” (commonly referred to as the “One Big Beautiful Bill” or “OBBB”) was signed into law.

At this time, we do not believe the provisions of the OBBB will have a material effect on our effective income tax rates for fiscal 2025 or future years.

However, the bonus depreciation provisions of the OBBB are estimated to reduce our cash payments for income taxes by approximately $3.4 million for fiscal 2025, based on actual and forecasted additions of qualifying assets in fiscal 2025.

Our net income for the third quarter of fiscal 2025 was $1.7 million, or $0.20 per diluted share, versus $16.0 million, or $1.87 per diluted share, in the third quarter of fiscal 2024.

Decreases in our net income and earnings per diluted share were due primarily to the factors that were previously discussed in this Item 2.

The third quarter of fiscal 2024 also included a benefit of $2.2 million related to an adjustment of the settlement charge incurred in the fourth quarter of 2023 to settle our defined benefit pension plan.

First Nine Months of Fiscal 2025 Compared to First Nine Months of Fiscal 2024

For the first nine months of fiscal 2025, the Company’s net sales were $2.238 billion, a decrease of $3.7 million, or 0.2%, compared to net sales of $2.242 billion in the first nine months of fiscal 2024.

• The overall decrease in net sales in the current fiscal period was attributable to specialty products, partially offset by an increase for structural products.

Higher overall volume was offset by overall lower pricing driven by external market factors.

• Approximately 69% of the Company’s net sales in the first nine months of fiscal 2025 were generated by specialty products, compared to approximately 70% in the first nine months of fiscal 2024.

The Company’s gross profit for the first nine months of fiscal 2025 decreased by $36.8 million, or 9.8%, to $339.0 million from $375.8 million in the prior year fiscal period.

• This decline in the Company’s gross profit in the first nine months of fiscal 2025 was attributable to both specialty products and structural products.

• Approximately 82% of the Company’s gross profit was generated by specialty products in both year-to-date fiscal periods.

• The Company’s gross margin percentage was 15.1% for the first nine months of fiscal 2025, a decrease from the 16.8% for the first nine months of fiscal 2024.

• We benefited in the first nine months of fiscal 2024 by $20.7 million (excluding interest) for changes in retroactive rates for certain AD/CV import duties, and this reduced the Company’s Cost of products sold for the 2024 fiscal period (see Note 2, Inventory , to the accompanying unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q).

This $20.7 million credit to Cost of products sold was partially offset by $8.0 million (excluding interest) of estimated expenses related to import duties in prior periods arising from certain classification discrepancies for products imported into the United States as separately entered shipments (see Note 8, Commitments and Contingencies , to the accompanying unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q).

These import duty items resulted in a net benefit of $12.7 million (excluding interest) to the Company’s Cost of products sold in the first nine months of fiscal 2024, and increased the Company’s gross margin percentage from 16.2% to 16.8% for the fiscal period.

These duty-related items benefited the operating results for specialty products for the first nine months of fiscal 2024.

The net impact of import duty-related adjustments was not material for the first nine months of fiscal 2025.

Specialty products - Net sales of specialty products, which include product types such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products, decreased by $14.0 million, or 0.9%, to $1.55 billion in the first nine months of fiscal 2025.

• The overall decline in net sales for specialty products in the current fiscal period was due to lower pricing primarily for engineered wood, millwork, and specialty lumber and panels, and by lower volume for industrial products and siding.

These declines were partially offset by higher volume for engineered wood products and specialty lumber and panels.

• Specialty products’ gross profit decreased by $31.5 million, or 10.2%, to $277.4 million, due primarily to a competitive pricing environment.

• Specialty products’ gross margin percentage decreased 190 basis points to 17.9% for the first nine months of fiscal 2025 compared to 19.8% in the first nine months of fiscal 2024, due primarily to a competitive pricing environment.

• The net impacts of the aforementioned adjustments related to import duty matters increased specialty products gross profit for the first nine months of fiscal 2024 by $12.7 million and increased specialty products gross margin percentage by 0.8% for the fiscal period.

The net impact of import duty-related adjustments was not material for the first nine months of fiscal 2025.

Structural products - Net sales of structural products, which include product types such as lumber, plywood, oriented strand board, rebar, and remesh, increased by $10.3 million to $689.9 million in the first nine months of fiscal 2025.

• This overall increase in net sales for structural products was due primarily to volume increases for panels and pricing increases for lumber, partially offset by pricing declines for panels due to external market factors.

• Compared to the first nine months of fiscal 2024, average commodity prices in U.S.

markets during the first nine months of fiscal 2025 for lumber were up 12.4% and down 15.3% for panels.

• Gross profit for structural products decreased by $5.3 million, or 8.0%, to $61.6 million from $66.9 million in the first nine months of fiscal 2024.

Higher net sales in the current year fiscal period were offset by margin compression due primarily to external market factors.

• Structural products’ gross margin percentage for the first nine months of fiscal 2025 was 8.9%, a decline from 9.8% in the first nine months of fiscal 2024, due primarily to margin compression mainly from external market factors.

Our SG&A expenses in the first nine months of fiscal 2025 increased by $5.7 million, or 2.1%, compared to the first nine months of fiscal 2024.

This overall increase was due primarily to increased logistics expenses driven by our strategy to grow sales in the multi-family channel, expenses associated with our digital transformation, and merit salary increases in early fiscal 2025, partially offset by lower incentive compensation expense in the current period.

Other operating, net improved by $2.7 million compared to the first nine months of fiscal 2024.

During the first quarter of fiscal 2025, we settled certain of the initial insurance claims related to property and equipment that were damaged or destroyed at our Erwin, Tennessee owned facility in late third quarter of fiscal 2024 due to Hurricane Helene.

We received insurance proceeds that exceeded the carrying values of the damaged or destroyed assets by $2.4 million, and this amount is included in Other operating, net on our unaudited condensed consolidated statement of operations for the first nine months of fiscal 2025.

Interest expense, net, which includes gross interest expense less interest income, increased by $9.6 million compared to the first nine months of fiscal 2024.

• Gross interest expense was $37.2 million and $36.0 million in the first nine months of fiscal 2025 and first nine months of fiscal 2024, respectively.

Gross interest expense in the first nine months of fiscal 2025 and the first nine months of fiscal 2024 included $0.6 million and $1.2 million, respectively, related to the aforementioned estimate for an accrual initially made and disclosed in the first quarter of 2024 related to amounts the Company believes it may owe for discrepancies in duties paid in prior years for certain imported goods (see Note 8, Commitments and Contingencies , to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q).

Excluding these amounts, gross interest expense in the first nine months of fiscal 2025 and the first nine months of fiscal 2024 would have been $36.6 million and $34.7 million, respectively, an increase in the current fiscal period of $1.8 million compared to the prior year fiscal period.

This $1.8 million increase in the current fiscal period was due to additional net finance leases added subsequent to the third quarter of fiscal 2024.

• Interest income was $13.6 million and $21.9 million in the first nine months of fiscal 2025 and first nine months of fiscal 2024, respectively.

Interest income in the current fiscal period and the prior year fiscal period included $0.5 million and $2.7 million, respectively, received with the aforementioned duty refunds related to changes in retroactive rates for certain AD/CV duties (see Note 2, Inventory , to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q).

Excluding these amounts, interest income in the current fiscal period and prior year fiscal period would have been $13.1 million and $19.2 million, respectively, a decrease of $6.1 million in the current fiscal period.

This $6.1 million decrease in the current fiscal period was due to lower average balances for interest-bearing deposits of cash/cash equivalents and due to lower interest rates paid on those deposits in the current fiscal period.

For fiscal 2025, we currently estimate our annual effective income tax rate to be approximately 29%.

Our effective income tax rates were 27.4% and 24.9% for the first nine months of fiscal 2025 and the first nine months of fiscal 2024, respectively.

Our effective income tax rates for both year-to-date fiscal periods were impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and adjustments to deferred income tax assets related to stock-based compensation.

Our effective income tax rate for the first nine months of fiscal 2024 also benefited from the partial release of a state income tax valuation allowance for deferred income tax assets.

As noted above in the discussion and analysis for the quarterly fiscal periods, we are evaluating the potential impacts of the OBBB, but at this time, we do not expect the provisions of the OBBB to have a material impact on our effective income tax rate for fiscal 2025 or future years.

Our net income for the first nine months of fiscal 2025 was $8.8 million, or $1.08 per diluted share, versus $47.8 million, or $5.53 per diluted share, in the first nine months of fiscal 2024.

Our net income for the first nine months of fiscal 2025 decreased due primarily to the factors that were previously discussed in this Item 2.

The first nine months of fiscal 2024 also included a benefit of $2.2 million related to an adjustment of the settlement charge incurred in the fourth quarter of 2023 to settle our defined benefit pension plan.

For fiscal 2026, we currently estimate that our annual effective income tax rate will be approximately 47%, excluding discrete items.

This estimate reflects nondeductible items and includes certain franchise taxes that are classified as income taxes under the provisions of ASC 740, Income Taxes .

We recognized an income tax benefit of $0.4 million for the fiscal three months ended April 4, 2026, resulting in an income tax benefit rate of 20% that reflects discrete items.

For the fiscal three months ended March 29, 2025, we recognized income tax expense of $1.3 million, resulting in an effective income tax rate of 32% for the period.

The effective income tax rates for both quarterly fiscal periods were impacted by the permanent addback to taxable income of certain nondeductible expenses, including meals and entertainment and certain employee compensation, as well as excess tax benefits or expenses realized from settlements of share-based compensation grants.

The Company’s effective income tax rates will differ from the statutory rates by such items.

Our Net loss for the fiscal first quarter of 2026 was $1.5 million, or $0.18 loss per basic and diluted share, versus $2.8 million, or $0.33 per basic and diluted share, in the fiscal first quarter of 2025.

These decreases in the current period were due primarily to the factors previously discussed in this Item 2.

Liquidity and Capital Resources

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We expect that these sources will be sufficient to fund our ongoing cash requirements for at least the next 12 months and into the foreseeable future.

As of September 27, 2025, we had $429 million of cash and cash equivalents plus $347.3 million of availability on our new revolving credit facility.

As of April 4, 2026, we had $319 million of cash and cash equivalents plus $340.1 million of availability on our revolving credit facility.

Senior Secured Notes

In October 2021, we completed the private offering of $300 million of our 6.0% senior secured notes due 2029 (the “2029 Notes”).

We have $300 million of 6.0% senior secured notes due 2029 (the “2029 Notes”) outstanding.

Interest is payable semi-annually.

Our 2029 Notes are scheduled to mature on November 15, 2029, and no principal is due until that time as long as we remain in compliance with the related covenants.

As of September 27, 2025, we were in compliance with these covenants.

As of April 4, 2026, we were in compliance with these covenants.

Interest payments of $9.0 million for the 2029 Notes are due twice in each calendar year, in May and in November.

Revolving Credit Facility

As disclosed in Note 5, Debt and Finance Lease Obligations , to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q), in August 2025 we completed a replacement of our prior revolving credit facility for a new revolving facility that has a maturity date of August 27, 2030 with Bank of America, NA as administrative agent (the “Revolving Credit Facility”).

Currently, the maximum borrowing capacity under the Revolving Credit Facility remains at $350 million and it also includes a $35 million swing line subfacility and letters of credit in an aggregate amount of up to $30 million.

Our revolving credit facility is scheduled to mature on August 27, 2030.

Currently, the maximum borrowing capacity under the revolving credit facility is $350 million and it also includes a $35 million swing line subfacility and letters of credit in an aggregate amount of up to $30 million.

Subject to certain conditions and consents, we have the option to increase the facility by an aggregate additional principal amount of up to $300 million which could in the future allow total borrowings of up to $650 million.

Similar to the prior revolving credit facility, the Revolving Credit Facility is a senior secured loan and letter of credit facility that is secured by a security interest in substantially all of our assets (other than real property), including inventories, accounts receivable, and proceeds from those items.

As of September 27, 2025 and December 28, 2024, we had zero outstanding borrowings under our revolving credit facilities.

Available borrowing capacity, reduced for undrawn letters of credit, under the revolving credit facilities was $347.3 million and $346.2 million as of September 27, 2025 and December 28, 2024, respectively.

Excess availability, which includes availability under the revolving credit facilities plus cash and cash equivalents in qualified deposit accounts, was $776.6 million as of September 27, 2025.

See Note 13, Subsequent Event , to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

If borrowings are outstanding under our Revolving Credit Facility, interest charges accrue at a rate per annum equal to (i) the then-current Secured Overnight Financing Rate (“SOFR”) plus a margin ranging from 1.25% to 1.75%, with the amount of such margin determined based upon the average of our excess availability (as defined) for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on SOFR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.25% to 0.75%, with the amount of such margin determined based upon the average of our excess availability (as defined) for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on the base rate.

As of April 4, 2026 and January 3, 2026, we had no outstanding borrowings under our revolving credit facility.

Available borrowing capacity, reduced for undrawn letters of credit, under the revolving credit facility was $340.1 million and $340.1 million as of April 4, 2026 and January 3, 2026, respectively.

Excess availability, which includes availability under the revolving credit facility plus cash and cash equivalents in qualified deposit accounts, was $659.2 million as of April 4, 2026.

Had there been outstanding borrowings under our revolving credit facility as of April 4, 2026, the annualized interest rate, as described in Note 6, Debt and Finance Lease Obligations , to the accompanying unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report, would have been 4.65%.

Finance Lease Obligations

Our finance lease obligations consist of leases for real estate, equipment, and vehicles totaling $321.8 million and $292.5 million as of September 27, 2025 and December 28, 2024, respectively.

Of the $321.8 million as of September 27, 2025, $241.5 million related to real estate and $80.3 million related to equipment.

Of the $292.5 million as of December 28, 2024, $242.8 million related to real estate and $49.8 million related to equipment.

Our finance lease obligations consist of leases for real estate, equipment, and vehicles totaling $316.7 million and $321.3 million as of April 4, 2026 and January 3, 2026, respectively.

Of the $316.7 million for finance lease obligations as of April 4, 2026, $240.0 million related to real estate and $76.7 million related to equipment.

Of the $321.3 million for finance lease obligations as of January 3, 2026, $240.6 million related to real estate and $80.6 million related to equipment.

During the fiscal first quarters of 2026 and 2025, we used cash of $4.6 million and $4.3 million, respectively, to repay principal portions of finance lease obligations, and also incurred interest expense of $6.9 million and $6.9 million, respectively, for our finance lease obligations.

For additional information about our lease obligations and expected impacts on our liquidity, see Note 7, Leases , to the accompanying unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.

Sources and Uses of Cash

Operating Activities

Net cash used in operating activities for the first nine months of fiscal 2025 was $2.1 million compared to net cash provided of $66.4 million in the first nine months of fiscal 2024.

The $68.5 million decrease in cash generated from operating activities during the first nine months of fiscal 2025 was primarily a result of a $39.1 million decrease in net income for the current fiscal

period and $31.0 million of net changes in operating assets and liabilities.

The bonus depreciation provisions of the OBBB are estimated to reduce our cash payments for income taxes by approximately $3.4 million for fiscal 2025, based on actual and forecasted additions of qualifying assets in fiscal 2025.

Net cash used in operating activities for the first three months of fiscal 2026 was $57.2 million compared to net cash used of $33.9 million in the first three months of fiscal 2025.

The $23.3 million decrease in cash generated from operating activities during the first three months of fiscal 2026 was primarily a result of $24.1 million of net changes in operating assets and operating liabilities.

Investing Activities

Net cash used in investing activities for the first nine months of fiscal 2025 was $18.9 million compared to net cash used of $19.0 million in the first nine months of fiscal 2024.

During the first nine months of fiscal 2025 and first nine months of fiscal 2024, we used cash of $21.5 million and $19.8 million, respectively, to acquire property and equipment.

In fiscal 2025, we received initial insurance proceeds of $2.4 million related to property and equipment that were damaged or destroyed due to Hurricane Helene at our Erwin, Tennessee owned facility in September 2024.

Net cash used in investing activities for the first three months of fiscal 2026 was $1.7 million compared to net cash used of $3.4 million in the first three months of fiscal 2025.

During the first three months of fiscal 2026 and first three months of fiscal 2025,

we used cash of $2.6 million and $5.9 million, respectively, to acquire property and equipment.

In the current quarter, we received a $0.9 million reduction in the consideration paid for our Disdero acquisition.

In the prior year period, we received initial insurance proceeds of $2.4 million related to property and equipment that was damaged or destroyed due to Hurricane Helene at our Erwin, Tennessee owned facility in September 2024.

Financing Activities

Net cash used in financing activities totaled $55.4 million for the first nine months of fiscal 2025 compared to net cash used of $42.9 million for the first nine months of fiscal 2024.

During the first nine months of fiscal 2025, we used cash of $38.1 million to repurchase shares of our common stock, compared to $30.0 million for the first nine months of fiscal 2024.

Cash payments on finance lease obligations were higher by $2.5 million in the current fiscal period due to new finance leases added subsequent to September 28, 2024.

Net cash used in financing activities totaled $7.8 million for the first three months of fiscal 2026 compared to net cash used of $19.3 million for the first three months of fiscal 2025.

This change was primarily driven by the decrease for repurchases of our common stock in the current period.

During the first three months of fiscal 2026, we used cash of $2.8 million to repurchase shares of our common stock, compared to $15.0 million for the first three months of fiscal 2025.

Payments to reduce finance lease obligations also used cash of $4.6 million and $4.3 million for the fiscal first quarters of 2026 and 2025, respectively.

Common Stock Repurchases

During the first nine months of fiscal 2025, we repurchased 503,556 shares of our common stock at an average price of $74.97 for a total of $37.7 million, under our 2023 share repurchase authorization.

During the first nine months of fiscal 2024, we repurchased 297,951 shares of our common stock at an average price of $100.63 for a total of $30.0 million under this same authorization.

During the first three months of fiscal 2026, we repurchased 59,051 shares of our common stock at an average price of $50.83 per share for a total of $3.0 million, under our 2023 share repurchase authorization.

During the first three months of fiscal 2025, we repurchased 186,048 shares of our common stock at an average price of $80.65 for a total of $15.0 million under this same authorization.

As of April 4, 2026, there remained $5.7 million of repurchase capacity under the 2023 authorization.

Between April 4, 2026 and April 21, 2026, we repurchased an additional 36,749 shares of our common stock at an average price of $54.46 per share, for a total of $2.0 million.

These dollar amounts include broker commissions paid but exclude any excise tax that was paid or may be due on the share repurchases under The Inflation Reduction Act of 2022.

As of September 27, 2025, there remained $8.7 million repurchase capacity under the 2023 authorization.

Between September 27, 2025 and October 31, 2025, we did not repurchase any additional shares of our common stock.

The repurchase dollar amounts noted above are based on trade date activity, while the amounts reported on our consolidated statements of cash flows for share repurchases are based on settlement date activity.

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This metric differs from traditional working capital in that it excludes certain current assets and current liabilities that are reported in our consolidated balance sheets.

Net working capital of $446.0 million as of September 27, 2025, compared to $411.5 million as of December 28, 2024, increased on a net basis by approximately $34.4 million, as shown below:

September 27, 2025 December 28, 2024 September 28, 2024

Net working capital of $473.1 million as of April 4, 2026, compared to $407.8 million as of January 3, 2026, increased on a net basis by approximately $65.4 million, as shown below:

April 4, 2026 January 3, 2026 March 29, 2025

(In thousands)

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Our investments in capital assets consist of purchases of owned assets and the inception of financing lease arrangements for long-lived assets.

The gross value of these assets is included in property and equipment, at cost on our unaudited condensed consolidated balance sheets.

For the first nine months of fiscal 2025, we invested $22.7 million in long-lived assets primarily related to investments in our fleet, facility enhancements, and ongoing digital transformation.

We also added $41.3 million of property and equipment under finance leases during the first nine months of fiscal 2025, primarily for new tractors and forklifts to enhance our logistics network.

For the first nine months of fiscal 2024, we invested $19.8 million in long-lived assets primarily related to investments in our distribution facilities and to a lesser extent, upgrading our fleet.

The gross value of these assets is included in property and equipment, at cost on our consolidated balance sheets.

For the first three months of fiscal 2026, we invested $2.6 million in long-lived assets primarily related to investments in our facility improvements, technology, and fleet.

For the first three months of fiscal 2025, we invested $6.4 million in long-lived assets primarily related to investments in our distribution facilities and upgrading our fleet.

We also added $28.1 million in new finance leases during the 2025 fiscal quarter for new tractors and forklifts to enhance our logistics network.

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The preparation of our consolidated financial statements and related disclosures in conformity with GAAP requires our management to make judgments and estimates that affect the amounts reported in our condensed consolidated financial statements and accompanying notes.

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7 of our 2025 Form 10-K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Our exposure includes commodity price risk and interest rate risk.

There have been no material changes to our exposure to market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

There have been no material changes to our exposure to market risks from those disclosed in our 2025 Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis