Doman Building Materials Group (DBM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was CAD 689.8 million, down 2.9% year-over-year due to a slowing construction market, higher interest rates, and softer housing demand, partially offset by the Southeast Forest Products acquisition.

• Net earnings for Q2 2024 were CAD 17 million, compared to CAD 29.2 million in Q2 2023.

• Gross margin performance remained solid at 15.7% through disciplined cost management and operational efficiencies.

• Management maintained tight inventory control and highlighted robust margin maintenance amid market volatility and lower average pricing.

• Integration of the Southeast Forest Products acquisition is progressing well, with further M&A opportunities being actively pursued.

Financial highlights

• Revenue for Q2 2024 was CAD 689.8 million, down 2.9% from CAD 710.7 million in Q2 2023.

• Gross margin was 15.7% (CAD 108.1 million), compared to 17% (CAD 121.2 million) last year.

• Adjusted EBITDA was CAD 50.6 million, including CAD 371,000 in non-recurring acquisition costs; net earnings were CAD 17 million, down 41.8%.

• Quarterly dividend of CAD 0.14 per share was declared and paid in July 2024.

• Six-month 2024 revenues were CAD 1.29 billion, with Adjusted EBITDA of CAD 96.2 million and net earnings of CAD 31.4 million.

Outlook and guidance

• Management remains cautiously optimistic, expecting flat to slightly lower volumes for the remainder of 2024, with some pricing appreciation in lumber.

• No formal earnings guidance will be provided in future quarters.

• Treated lumber prices in the South are expected to improve modestly in the second half, but the market remains oversupplied.

• Management expects continued market volatility, with forward-looking statements addressing funding, dividends, commodity pricing, debt repayment, and economic conditions.