Doman Building Materials Group (TSE:DBM) reported record second-quarter revenue for 2026 as higher pricing in certain construction-material categories offset a market environment marked by uneven demand and economic uncertainty.
Revenue for the three months ended June 30 rose 2% to C$904.5 million from C$886.7 million a year earlier. Chairman and Chief Executive Officer Amar Doman said the result reflected the company’s diversified product offering, distribution network and customer relationships across North America.
Margins Stable, Net Earnings Increase
Gross margin dollars increased 2.2% to C$145.8 million, while gross margin percentage held steady at 16.1%. Doman said the stable margin reflected disciplined inventory procurement and pricing management despite volatility in lumber pricing.
Adjusted EBITDA was just under C$79 million, broadly consistent with the prior-year quarter. CFO Darren Gwozd reported EBITDA of C$76.8 million, down 1.8% from C$80 million in the second quarter of 2025.
Net earnings rose to C$31.2 million from C$27.7 million a year earlier. Finance costs declined C$1.7 million to C$17.6 million, which Gwozd attributed largely to lower overall net debt and lower use of the revolving loan facility during the quarter.
Operating expenses increased to C$90.9 million from C$87.9 million. Distribution, selling and administration expenses rose 6.9% to C$67 million, primarily because of broad inflationary pressures. During the analyst question-and-answer session, Gwozd said roughly half of the increase was related to non-operational items, including earn-out costs tied to a prior acquisition. He said the earn-out costs indicated that the acquired business was performing ahead of expectations used in the original purchase allocation.
For the first six months of 2026, the company reported revenue of C$1.67 billion, adjusted EBITDA of C$147 million and net earnings of C$55.1 million, compared with C$51.2 million in the first half of 2025. First-half gross margin percentage improved slightly to 16.5%.
Cash Flow and Capital Spending
Operating activities consumed C$2.3 million in cash during the first six months of the year, compared with generating C$1.2 million in the prior-year period. Gwozd said the result was affected by the timing of income tax payments, while operating activities before non-cash and non-working-capital changes generated C$96.5 million, compared with C$100.7 million a year earlier.
The company generated C$35.9 million from financing activities related to funding seasonal working capital, compared with C$6.9 million in the first half of 2025. Net advances under its revolving loan facility totaled C$84.9 million, versus C$46.8 million a year earlier.
Doman invested C$21 million in property, plant and equipment during the first half, including C$16 million spent in the first quarter. Investing activities consumed C$15.3 million in cash, compared with cash generated from investing activities in the prior-year period, which included C$14.4 million in proceeds from the sale of a portion of the company’s timberlands.
The company paid C$24.6 million in dividends during the first half and declared a quarterly dividend of C$0.14 per share. Gwozd said Doman was not in breach of any lending covenants during the period.
Management Sees Steady Early Third-Quarter Conditions
Asked about third-quarter demand, Doman said July trends were broadly similar to the second quarter. He described the operating environment as “steady as she goes,” saying neither the economy nor consumer conditions had changed materially.
Management did not provide earnings guidance and said it does not anticipate providing guidance in future quarterly or interim investor communications.
On volume trends, Doman said the company was not experiencing a volume issue, with volumes nearly in line with 2025 levels and higher in some areas. He said he could not quantify the exact contribution of lumber-price inflation to quarterly revenue, but noted that pricing had helped lift sales above C$900 million.
Fencing Production Expansion Progresses
Doman said its Gilmer sawmill in Texas was operating but had not yet reached full capacity following upgrades. The company has reduced labor costs at the facility through automation, he said.
Its West Hill sawmill was expected to begin production shortly, with sales of one-inch fence products and pickets anticipated later in the third and fourth quarters. Doman said the company’s capital expenditure plans for the projects remained on track.
The CEO also said tariffs on South American imports were a net benefit for Doman’s fencing business, generating additional customer inquiries and supporting the company’s strategy to increase U.S. fencing production while reducing imports.
In decking, Doman said composite products continue to perform well, though the price gap remains a consideration for customers. The company distributes composite decking while continuing to produce and sell lumber products, including treated lumber used for deck substructures.
About Doman Building Materials Group (TSE:DBM)
Doman Building Materials Group Ltd is a wholesale distributor of building materials and home renovation products. The company services the new home construction, home renovation and industrial markets by supplying the retail and wholesale lumber and building materials industry, hardware stores, industrial and furniture manufacturers and similar concerns. Its operations also include timber ownership and management of private timberlands and forest licenses, and agricultural post-peeling and pressure treating through CanWel Fibre Corp.
