Doman Building Materials Posts Record Q2 Revenue, Steady Margins

Doman Building Materials Group reported record second-quarter revenue for 2026, with sales rising 2% to C$904.5 million from C$886.7 million a year earlier. Chairman and CEO Amar Doman said the result reflected the company's diversified product lineup and distribution network across North America.

Construction materials accounted for 84% of quarterly sales. Specialty and allied products made up most of the rest. Gross margin dollars increased 2.2% to C$145.8 million, while the margin percentage held at 16.1%. Doman said stable margins came from disciplined inventory procurement and pricing management despite volatile lumber prices.

Adjusted EBITDA came in at 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. CFO Darren Gwozd said finance costs declined C$1.7 million to C$17.6 million, driven by lower net debt and reduced use of the revolving credit facility during the quarter.

Operating expenses increased to C$90.9 million from C$87.9 million. Selling and administration costs, including distribution, rose 6.9% to C$67 million, mainly because of broad inflation. On the analyst call, Gwozd said about half of that increase was tied to non-operational items, including earn-out costs from a prior acquisition. He said those costs indicated the acquired business was performing ahead of expectations used in the original purchase allocation.

For the first half, revenue reached C$1.67 billion, adjusted EBITDA C$147 million, and net earnings C$55.1 million, compared with C$51.2 million in the first half of 2025. First-half gross margin improved slightly to 16.5%.

Operating activities used C$2.3 million in cash during the first six months, versus generating C$1.2 million a year earlier. Gwozd said the shift reflected timing of income-tax payments. Operating activities before non-cash and working-capital changes generated C$96.5 million, down from C$100.7 million.

The company drew C$35.9 million from financing activities to fund seasonal working capital, compared with C$6.9 million in the first half of 2025. Net advances under its revolving facility totaled C$84.9 million, up from C$46.8 million. Doman invested C$21 million in property, plant and equipment during the half, including C$16 million in the first quarter.

Doman paid C$24.6 million in dividends in the first half and declared a quarterly dividend of C$0.14 per share. Gwozd said the company was not in breach of any lending covenants.

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 plan to give guidance in future quarterly communications.

On volumes, Doman said the company was not experiencing a volume issue, with volumes nearly in line with 2025 levels and higher in some areas. He could not quantify the exact contribution of lumber-price inflation to quarterly revenue but noted that pricing helped push sales above C$900 million.

Doman said its Gilmer sawmill in Texas was operating but had not reached full capacity after upgrades. The company has reduced labor costs at the facility through automation. The 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. Capital expenditure plans for both projects remained on track.

The CEO 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, 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.