Doman Building Materials Group (DBM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues were CAD 690 million, down 2.9% year-over-year due to a challenging pricing environment, higher interest rates, and a slowdown in the construction materials market, partially offset by the Southeast Forest Products acquisition.

• Gross margin was 15.7% (CAD 108 million), down from 17.0% (CAD 121.2 million) in Q2 2023, reflecting lower average pricing.

• Adjusted EBITDA for Q2 2024 was CAD 50.6 million, including $371,000 in non-recurring acquisition costs.

• Net earnings for the quarter were CAD 17 million, a 41.8% decrease from Q2 2023.

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

Financial highlights

• Q2 2024 revenues: CAD 689.8 million, down from CAD 710.7 million in Q2 2023, mainly due to a softer construction materials market.

• Gross margin dollars: CAD 108.1 million, down from CAD 121.2 million year-over-year.

• Adjusted EBITDA: CAD 50.6 million in Q2 2024 vs. CAD 66.0 million in Q2 2023.

• Net earnings: CAD 17 million in Q2 2024 vs. CAD 29.2 million in Q2 2023; adjusted net earnings before non-recurring costs were CAD 17.3 million.

• Operating cash flow before working capital changes was CAD 68.9 million for the first half, down from CAD 85.8 million in 2023.

Outlook and guidance

• Management expects continued volatility in market activity and pricing, with flat to slightly lower volumes for the remainder of 2024 and some pricing appreciation in lumber.

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

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

• Working capital patterns are expected to follow typical seasonal trends for the rest of the year.