The quarter came in below already-lowered expectations. Adjusted EPS was $1.17 versus a published consensus of roughly $1.25, while revenue was $3.86 billion versus about $3.91 billion expected. The miss was not just headline weakness: adjusted EBITDA fell 34.9% year over year to $329.3 million, and margin contracted 350 basis points to 8.5% as lower volume reduced operating leverage (Adjusted EBITDA reconciliation; Financial Performance Highlights).
| Metric | Q2 2026 | Q2 2025 / expectation | Change |
|---|---|---|---|
| Net sales | $3.86B (Financial Performance Highlights) | $4.23B prior year / ~$3.91B consensus | -8.8% YoY |
| Adjusted EPS | $1.17 (Adjusted Net Income reconciliation) | $2.38 prior year / ~$1.25 consensus | -50.8% YoY |
| Adjusted EBITDA | $329.3M (Adjusted EBITDA reconciliation) | $506.1M prior year | -34.9% YoY |
| Adjusted EBITDA margin | 8.5% (Adjusted EBITDA reconciliation) | 12.0% prior year | -350 bps |
| Free cash flow | $32.2M (Free Cash Flow) | $255.0M prior year | -87.4% YoY |
The more important news is the full-year reset, not the quarterly miss alone. Management cut 2026 revenue guidance from $14.8B-$15.8B to $14.0B-$14.8B and adjusted EBITDA guidance from $1.3B-$1.7B to $1.0B-$1.2B. The underlying assumptions also deteriorated: single-family starts are now expected down mid- to high-single digits and multifamily starts down mid-single digits, versus the prior assumption of flat starts in both categories (2026 Full Year Total Company Outlook; 2026 Full Year Assumptions).
Profitability is being reset faster than revenue. The new EBITDA range implies a 7.1%-8.1% margin, below the prior 8.8%-10.8% range. That reflects gross margin pressure and fixed-cost deleveraging: gross margin fell to 28.1% from 30.7%, while SG&A declined only 3.0% against an 8.8% sales decline, pushing SG&A to 24.8% of revenue (Financial Performance Highlights; Income Statement).
The balance sheet provides liquidity, but the cushion is thinner. Liquidity remained approximately $1.6 billion, yet net debt rose to $4.6 billion and leverage increased to 3.6x LTM adjusted EBITDA from 2.3x a year earlier. Free cash flow fell sharply to $32.2 million, while cash declined to $65.7 million and inventory increased to $1.27 billion from $1.09 billion at year-end (Capital Structure, Leverage, and Liquidity Information; Cash Flow statement; Balance Sheet).
Net read: a genuine earnings miss compounded by a material outlook cut. Weak housing demand was already understood, so the novelty is mainly the magnitude: weaker revenue, sharper margin erosion, higher leverage, and a lower second-half outlook than the market had been carrying. Cost savings and reduced capital spending offer some defense, but they do not offset the downgrade in the near-term operating picture (Productivity Savings; 2026 Full Year Total Company Outlook).
Read the original 8-K on SEC EDGAR ↗