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YoY shift: Lean +
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.31pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.02pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.63pp
Lean +
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
weaknesses+5
adversely+3
adverse+2
loss+2
negative+2
Positive rising
successful+1
effective+1
positive+1
strong+1
Risk Factors (Item 1A)
10,586 words
Item 1A. Risk Factors.
Risks Related to Our Industry and Economic and Market Conditions
Our industry is highly sensitive to macroeconomic conditions. Negative economic events including, but not limited to, actual or perceived economic downturns, lower business and consumer confidence, high interest rates, inflation, and lower new construction starts and repair and remodeling activity may materially and adversely affect the outlook for our business, financial condition and results of operations.
The construction industry is highly sensitive to global, national and regional macroeconomic conditions. The risks associated with our business may become more acute in periods of a slowing economy or economic downturns, which may reduce business and consumer confidence and result in decreased demand for our products. Furthermore, rising or volatile interest rates may further increase economic uncertainty and heighten these risks. In addition, instability and weakness of the U.S. and global economies, including due to disruptions to financial markets, inflation, actual or perceived economic , rising , geopolitical events, changes in trade laws, the effects of governmental initiatives to management economic conditions, and the potential effects on consumer spending, may materially affect our business, financial condition and results of operations. Changes in, or the adoption of, new laws, regulations and policies that may be enacted in the U.S. or elsewhere could also materially and affect our business, financial condition and results of operations.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
adverse+1
opportunistic+1
volatility+1
limitation+1
terminations+1
Positive rising
gain+6
greater+2
leading+1
effective+1
better+1
MD&A (Item 7)
6,300 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Our Business
Cornerstone Building Brands, Inc. (“Cornerstone Building Brands” together with its subsidiaries, unless the context requires otherwise, the “Company”, “we,” “us” or “our”) is a holding company incorporated in the State of Delaware. We are a leading manufacturer of exterior building products in North America by sales and serve residential and commercial customers across both the new construction and repair and remodel markets.
Our mission is to be relentlessly committed to our customers and to create superior exterior building solutions that enable communities to grow and thrive. All references herein for the year “2025” represents the year ended December 31, 2025 and “2024” represents the year ended December 31, 2024.
Our operations are organized in three reportable segments, which are: Windows & Doors, Siding & Accessories, and Metal Solutions. In the third quarter of 2025, we renamed our reportable segments to better reflect our product portfolio and service offerings and to provide greater clarity to investors and stakeholders, including our customers.
• Our Windows & Doors reportable segment offers a broad line of windows and doors at multiple price-points for residential new construction and repair and remodel end markets in the United States (“U.S.”) and Canada. Our main products include vinyl, aluminum, wood-composite and aluminum clad-wood windows and patio doors, as well as steel, wood-composite, and fiberglass entry doors.
Our residential business depends heavily on the new home construction and repair and remodel markets. Our commercial business depends heavily on the levels of commercial construction activity. Current market estimates continue to forecast high levels of volatility in 2026, including greater and faster-than-normal changes in factors such as interest rates, inflation, business and consumer confidence, unemployment, and the availability of business and consumer credit. Such volatility could cause declines in the residential and commercial construction activity markets and could lead to decreased demand for and sales of our products, which would have an adverse impact on our business, financial condition and results of operations.
Our financial results are also impacted by our consumers’ ability to finance home repair and remodeling projects or the purchase of new homes. The ability of consumers to finance these purchases is affected by such factors as new and existing home prices, homeowners’ equity values, interest rates and home foreclosures, which in turn could result in a tightening of lending standards by financial institutions and reduce the ability of some consumers to finance repair and remodeling expenditures or home purchases. Declining home values, increased home foreclosures and tightening of credit standards by lending institutions have in the past and may in the future negatively impact the home repair and remodeling and the new construction sectors, which could adversely affect our business, financial condition and results of operations.
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Historically, any uncertainty about economic conditions has had a negative effect on our business, and will continue to pose a risk to our business as our customers may postpone spending in response to tighter credit, higher interest rates, negative financial news or declines in income or asset values, which could have a material negative effect on the demand for our products. Other factors that could influence demand include fuel and other energy costs, the availability or increased cost of homeowner’s insurance, overall conditions in the residential and commercial real estate markets, labor and healthcare costs, access to credit, tariffs, and other macroeconomic factors.
From time to time, our industry has also been adversely affected in various parts of the country by declines in commercial construction starts, including but not limited to, high vacancy rates, changes in tax laws affecting the real estate industry, high interest rates and the unavailability of financing. Sales of our products may be adversely affected by continued weakness in demand for our products within particular customer groups, or a continued decline in the general construction industry or particular geographic regions. These and other economic factors could have a material adverse effect on demand for our products and on our business, financial condition and results of operations.
Risks Related to Our Business
Inability to optimize operational efficiency could adversely affect our business, results of operation and financial condition.
Our ability to sell quality products at profitable margins depends in large part on our ability to efficiently operate our facilities. We are implementing initiatives to optimize our operational efficiencies and reduce costs while ensuring superior quality. If we are unsuccessful in implementing these or other initiatives, or are otherwise unable to operate our manufacturing facilities efficiently, produce high quality products and provide value to our customers, our business, financial condition and results of operations could be materially and adversely affected.
Failure to meet customer expectations could adversely affect our business, results of operation and financial condition.
Our business depends on maintaining strong relationships with retailers, distributors, contractors, and end-users of our products. Negative customer experiences, whether due to product quality issues, delayed deliveries, inadequate technical support, or insufficient responsiveness, could materially impact our reputation and competitive position. If we are unable to consistently deliver a positive customer experience, our ability to retain existing customers and attract new ones may be compromised, which could have a material adverse effect on our business and financial condition.
Failure to attract and retain executives and skilled employees could adversely affect our business, results of operation and financial condition.
Our senior management team has acquired specialized knowledge and skills with respect to our business, and the loss of any of these individuals could harm our business, especially if we are not successful in developing adequate succession plans. The loss of any of these individuals or an inability to attract additional qualified personnel could prevent us from implementing our business strategy and could adversely impact our business and our future financial condition or results of operations. In addition, our ability to attract and retain or replace employees is challenging due to a shortage of hourly and technically skilled workers for our manufacturing facilities and a competitive market for non-manufacturing workers. We face intense competition for skilled worker talent to operate our manufacturing facilities, including from current and potential competitors in our industry. As a large-scale manufacturer, our workforce is distributed across North America, and we may incur significant costs to attract and retain employees, particularly in smaller, local markets. If we do not attract and retain the services of individuals to operate our manufacturing facilities, we may experience delays in producing our products, which may result in a reduction in net sales and an adverse effect on our business, results of operations and financial condition. In addition, if we are not successful in attracting and retaining the services of non-manufacturing workers, our business, our financial condition and results of operations could be adversely impacted.
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Increases in labor costs, potential labor disputes, union organizing activity and work stoppages at our facilities or the facilities of our suppliers and changes in demographics or regulatory conditions could delay or impede our production, reduce sales of our products and increase our costs.
Our ability to attract and retain qualified manufacturing team members to operate our manufacturing plants efficiently is critical to our financial performance. Our financial performance is affected by the availability of qualified personnel and the cost of labor. As of December 31, 2025, about 10% of our employees were represented by labor unions. The collective bargaining agreements with those labor unions will expire in fiscal years 2027 and 2028. We are subject to the risk that strikes or other types of conflicts with personnel may arise or that we may become a subject of union organizing activity. Furthermore, some of our direct and indirect suppliers have unionized work forces. Strikes, work stoppages or slowdowns experienced by these suppliers could result in slowdowns or closures of facilities where components of our products are manufactured. Any interruption in the production or delivery of our products could reduce sales of our products and increase our costs. Any labor shortage will create operating inefficiencies that could adversely impact our financial performance. In addition, changes in demographic or regulatory conditions in certain geographic markets, including changes in immigration law, may adversely affect our ability or our customers’ ability to maintain an adequately skilled labor force.
The industries in which we operate are highly competitive.
Competition in the construction markets of the building industry is intense. Competition is based primarily on aesthetics, quality, price, service, product performance, breadth of product offerings and responsiveness to distributor, retailer and installer needs, as well as end-user customer preference. In addition, we also compete with alternative building products materials and alternative methods of building construction that do not utilize our products which may be viewed as more traditional, more aesthetically pleasing or having other advantages.
In our Windows & Doors and Siding & Accessories reportable segments, we compete with other national and regional manufacturers of exterior building products. Some of these companies are larger and have greater financial resources than we do. Accordingly, these competitors may be better equipped to withstand changes in conditions in the industries in which we operate and may have significantly greater operating and financial flexibility than we do. Additionally, our products face competition from alternative materials, such as wood; composites and fiberglass in windows; metal; fiber cement; and masonry and composites in siding. In our Metal Solutions reportable segment, we compete with a number of other manufacturers of metal components and engineered building systems ranging from small local firms to large national firms. In addition, we and other manufacturers of metal components and engineered building systems compete with alternative methods of building construction.
Further, vertical consolidation by our competitors may negatively impact our ability to compete. For example, in the past several of our competitors in the Metal Solutions reportable segment were acquired by steel producers. Competitors owned by steel producers may have a competitive advantage on raw materials that we do not enjoy. Steel producers may prioritize deliveries of raw materials to such competitors or provide them with more favorable pricing, both of which could enable them to offer products to customers at lower prices or accelerated delivery schedules.
In all our reportable segments, failure to provide our customers with quality, service, on-time delivery and project completion, and other value additions would negatively affect our ability to compete in our industry. The resulting increased competition from other exterior building products manufacturers, as well as the competition from alternative building materials and alternative construction methods, could cause us to lose our customers and lead to net sales decreases, which would impact our results of operations.
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Price volatility and supply constraints for raw materials could prevent us from meeting delivery schedules to our customers or reduce our profit margins.
Our business is heavily dependent on the price and supply of raw materials including steel, PVC resin, aluminum and glass. Raw material prices have been volatile in recent years and may remain volatile in the future. Raw material prices are influenced by numerous factors beyond our control, including general domestic and international economic conditions; currency fluctuations; supply constraints; competition; labor costs; freight and transportation costs; production costs; and tariffs, import duties and other trade restrictions. For example, the second Trump administration has imposed, and has proposed additional, broad tariffs on all imports, including finished goods, steel and aluminum, as well as targeted tariffs on certain trading partners. The current tariffs, along with any future tariffs and trade restrictions that may be implemented by the second Trump administration, could result in reduced overall economic activity and increased costs in operating our business. See Risk Factor, “ We face risks related to our international operations.”
A sudden increase in demand for steel, PVC resin, aluminum or glass could affect our ability to purchase such raw materials and result in rapidly increasing prices. We have historically been able to substantially pass on significant cost increases in raw materials through price increases to our customers; however, we may not be able to do so in the future. Further, if the available supply of any of the raw materials we use declines, we could experience a deterioration of service from our suppliers or interruptions or delays that may cause us not to meet delivery schedules to our customers. Any of these problems could adversely affect our business, results of operations and financial condition. We can give no assurance that steel, PVC resin, aluminum or glass will remain available, that prices will not continue to be volatile or that we will be able to purchase these raw materials on favorable or commercially reasonable terms.
Further, we use energy in the manufacturing and transportation of our products. In particular, our manufacturing plants use considerable amounts of electricity and natural gas. Consequently, our operating costs typically increase if energy costs rise. During periods of higher energy costs, we may not be able to recover our operating cost increases through price increases without reducing demand for our products. To the extent we are not able to recover these cost increases through price increases or otherwise, our profitability will be adversely impacted. From time to time, we may partially hedge our exposure to higher prices through fixed forward positions. However, such fixed forward positions or other hedging instruments may not fully mitigate our risk from operating cost increases.
We rely on third-party suppliers for materials in addition to steel, PVC resin, aluminum and glass, and if we fail to identify and develop relationships with a sufficient number of qualified suppliers, or if there is a significant interruption in our supply chains, our business and results of operations could be adversely affected.
In addition to steel, PVC resin, aluminum and glass, our operations require other raw materials from third-party suppliers. We generally have multiple sources of supply for our raw materials; however, in some cases, materials are provided by a single supplier. The loss of, or substantial decrease in the availability of, products from our suppliers, or the loss of a key supplier, could adversely impact our business, financial condition and results of operations. In addition, supply interruptions could arise from shortages of raw materials, commodity cost volatility, pandemics, labor disputes or weather conditions affecting products or shipments or other factors beyond our control. For example, U.S. and global markets are experiencing volatility and disruption related to the escalation of geopolitical tensions and the military conflict currently ongoing in Ukraine and the Middle East. While we do not have any customer or direct supplier relationships with any entities in Russia, Ukraine, or the Middle East, these conflicts could lead to market or operational disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. Short- and long-term disruptions in our supply chain would result in a need to maintain higher inventory levels as we replace similar product, a higher cost of product and ultimately a decrease in our net sales and profitability. To the extent our suppliers experience disruptions, there is a risk for delivery delays, production delays, production issues or delivery of non-conforming products by our suppliers. Even where these risks do not materialize, we may incur costs as we prepare contingency plans to address such risks. In addition, disruptions in transportation lines could delay our receipt of raw materials. If our supply of raw materials is disrupted or our delivery times are extended, our business, results of operations and financial condition could be materially adversely affected.
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An inability to successfully develop new products or improve existing products could negatively impact our ability to attract new customers or retain existing customers, including our significant customers.
Our success depends on meeting consumer needs and anticipating changes in consumer preferences with successful new products and product improvements. We aim to introduce products and new or improved production processes proactively to meet customer needs, and to offset obsolescence and decreases in sales of existing products. While we devote significant focus to the development of new products, we may not be successful in product development and our new products may not be commercially successful. In addition, it is possible that competitors may improve their products more rapidly or respond to changing consumer preferences more effectively, which could adversely affect our net sales. Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories, which could adversely impact our business, results of operations and financial condition.
Our Windows & Doors and Siding & Accessories reportable segments depend on a core group of significant customers for a substantial portion of net sales and we expect this to continue for the foreseeable future. For the year ended December 31, 2025, the top 10 customers accounted for 51% of gross sales in Windows & Doors and 53% of gross sales in Siding & Accessories. The loss of, or a significant adverse change in our relationships with our largest customers, or loss of market position of any major customer, whether because of an inability to successfully develop new products or improve existing products, or otherwise, could cause a material decrease in net sales. The loss of, or a reduction in orders, from any significant customers, losses arising from customers’ disputes regarding shipments, fees, merchandise condition or performance or related matters, or an inability to collect accounts receivable from any major customer could adversely impact our net sales and profitability. In addition, net sales from customers that have accounted for significant net sales in past periods, individually or as a group, may not continue, or if continued, may not reach or exceed historical levels in any period.
Our business may be adversely affected by weather conditions and other external factors beyond our control.
Markets for our products are seasonal and can be affected by inclement weather conditions. Historically, our business has experienced increased sales in the second and third quarters of the year due to increased construction during those periods. Because much of our overhead and operating expenses are spread ratably throughout the year, our operating profits tend to be lower in the first and fourth quarters. Inclement weather conditions can affect the timing of when our products are supplied or installed, causing reduced profit margins when such conditions exist. For example, unseasonably cold weather or extraordinary amounts of rainfall in the markets we serve may decrease construction activity.
Further, other external factors beyond our control could cause disruptions at any of our facilities, including maintenance outages; prolonged power failures or reductions; a breakdown, failure or substandard performance of any equipment or other operational problems; disruptions in the transportation infrastructure, including railroad tracks, bridges, tunnels or roads; fires, floods, hurricanes, earthquakes or other catastrophicdisasters; pandemics; or an act of terrorism. Any prolongeddisruption in operations at any of our facilities could cause a significant loss in production. As a result, we could incur significantly higher costs and longer lead times associated with distributing our products to customers during the time that it takes for us to reopen or replace a damaged facility. This could cause our customers to purchase from our competitors and stop purchasing from us either temporarily or permanently, particularly where we are currently a customer’s single source of supply. If any of these events were to occur, it could adversely affect our business, financial condition and results of operations.
If we are unable to enforce our intellectual property rights, or if such intellectual property rights become obsolete, our competitive position could be adversely affected.
As a company that manufactures and markets branded products, we rely heavily on trademark and service mark protection to protect our brands. We also have issued patents and rely on trade secret and copyright protection for certain of our technologies. These protections may not adequately safeguard our intellectual property and we may incur significant costs to defend our intellectual property rights, which may adversely affect our financial condition. There is a risk that third parties, including our current competitors, will infringe on our intellectual property rights or will claim that our products infringe on their intellectual property rights, in which case we would have to defend these rights or ourselves, which may be costly or unsuccessful.
There can be no assurance that the efforts we have taken to protect our business with respect to intellectual property rights will be sufficient or effective. If we are unable to protect and maintain our intellectual property rights, or if there are any successfulchallenges to our intellectual property rights or infringement proceedings against us, our business, financial condition and results of operations could be materially and adversely affected.
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We could incur significant costs as a result of compliance with, violations of or liabilities under applicable environmental, health and safety laws.
Our operations include 113 manufacturing facilities and 116 distribution and warehouse facilities located throughout North America (see “ Item 2. Properties ” for additional information). As a result, our operations are subject to various federal, state, local and foreign environmental, health and safety (“EHS”) laws. Among other things, these laws (i) regulate the emissions and discharges of pollutants into the environment, (ii) govern the use, storage, treatment, disposal and management of hazardous materials and wastes, (iii) protect the health and safety of our employees, the end-users of our products, and the general public, (iv) regulate the chemicals imported and used in our raw materials and products, and (v) impose liability for the costs of investigating and remediating present and past releases of hazardous materials and other related damages. Violations of these laws or of any conditions contained in environmental permits could result in substantial fines or penalties, injunctive relief, requirements to install pollution or other controls or other equipment, civil sanctions, and in extreme cases, criminal sanctions, permit revocations, and facility shutdowns. We could be held liable for the costs to investigate, remediate or otherwise address contamination at any real property we have historically owned or, operated, at third party sites contracted for waste disposal, or at sites where predecessors released hazardous materials. We also could incur fines, penalties or sanctions or be subject to third-party claims, including indemnification claims, for property damage, personal injury or otherwise because of violations of or liabilities under EHS laws or in connection with releases of hazardous materials. In addition, changes in or new interpretations of existing EHS laws, regulations or enforcement policies, the discovery of previously unknown environmental contamination, or the imposition of other environmental liabilities or obligations in the future, in each case with respect to our operations, products or business activities, may lead to additional costs that could have a material adverse effect on our business, financial condition or results of operations. We cannot predict whether such liabilities or obligations will arise in the future or the scope thereof.
Changes in building codes and standards could increase the cost of our products, lower the demand for our products, or otherwise adversely affect our business.
Our products are subject to extensive and complex local, state, federal, and foreign statutes, ordinances, rules, and regulations. These mandates, including but not limited to building design safety and construction standards and zoning requirements, affect the cost, selection, and quality requirements of the products we sell, including building structures and envelopes, roofs, windows and siding. These statutes, ordinances, rules, and regulations often provide broad discretion to governmental authorities as to the types and quality specifications required for products we sell that are used in new residential and commercial construction and home renovations and improvement projects. In addition, we cannot predict whether and how any of these standards may change in the future. Ongoing compliance with current standards and with any future changes thereto may increase the costs of manufacturing our products or may reduce the demand for impacted products in affected geographical areas or product markets, which could have a material adverse effect on our business, financial condition, and results of operations.
We face risks related to acquisitions and dispositions that could adversely affect our results of operations.
We have a history of expansion through acquisitions, and, from time to time, we evaluate acquisitions and dispositions of assets and businesses. We believe that if our industry continues to consolidate, our future success may depend, in part, on our ability to successfully complete acquisitions. Acquisitions and dispositions involve a number of risks, including:
• The risk of incorrect assumptions or estimates regarding the future results of an acquired business or expected cost reductions or other synergies expected to be realized as a result of acquiring the business;
• The risk of disposing of an asset or business at a price or on terms that are less favorable than we had anticipated;
• Difficulty in finding sellers or buyers;
• Diversion of management’s attention from existing operations;
• Unexpectedlosses of key employees, customers and suppliers of an acquired business;
• Integrating the financial, technological and management standards, processes, procedures and controls of an acquired business with those of our existing operations;
• Increasing the scope, geographic diversity and complexity of our operations; and
• Potential litigation or other claims arising from an acquisition or disposition.
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We can provide no assurance that we will be successful in identifying or completing any future acquisitions or dispositions or that any businesses or assets that we are able to acquire will be successfully integrated into our existing business. The incurrence of additional debt, contingent liabilities and expenses in connection with any future acquisitions could have a material adverse effect on our business, financial condition and results of operations.
In addition, we may be subject to claims arising from the operations of businesses from periods prior to the dates we acquired them. These claims or liabilities could be significant. Our ability to seek indemnification from the former owners for these claims or liabilities is limited by various factors, including the specific limitations contained in the respective acquisition agreements and the financial ability of the former owners to satisfy such claims or liabilities. If we are unable to enforce any indemnification rights we may have against the former owners or if the former owners are unable to satisfy their obligations for any reason, including because of their current financial position, or if we do not have any right to indemnification, we could be held liable for the costs or obligations associated with such claims or liabilities, which could adversely affect our operating performance.
We risk liabilities and losses due to personal injury, property damage or product liability claims, which may not be covered by insurance.
Our workers are subject to hazards associated with work in manufacturing environments. Operating hazards can cause personal injury and loss of life, as well as damage to or destruction of property. We are subject to either deductible or self-insured retention amounts, per claim or occurrence, under our Property/Casualty insurance programs, as well as an individual stop-loss limit per claim under our group medical insurance plan that we believe are consistent with industry practice. The transfer of risk through insurance cannot guarantee that coverage will be available for every loss or liability that we may incur in our operations.
Exposures that could create insured (or uninsured) liabilities are difficult to assess and quantify due to unknown factors, including but not limited to injury frequency and severity, natural disasters, terrorism threats, third-party liability, and claims that are incurred but not reported. Although we engage third-party actuarial professionals to assist us in determining our probable future loss exposure, it is possible that claims or costs could exceed our estimates or our insurance limits, or could be uninsurable. In such instances we might be required to use working capital to satisfy these losses rather than to maintain or expand our operations, which could materially and adversely affect our business, financial condition and results of operations.
Further, we face the risk of product liability exposure, including regulatory penalties and class action and warranty claims, in the event that the use of any of our products results in personal injury or property damage. In the event that any of our products prove to be defective, among other things, we may be responsible for damages related to any defective products and may be required to cease production, recall or redesign such products. Because of the long useful life of our products, it is possible that latent defects might not appear for several years. Any insurance we maintain may not continue to be available on acceptable terms or such coverage may not be adequate for liabilities actually incurred. Further, any claim or product discontinuance, recall or redesign could result in adverse publicity against us, which could cause sales to decline, or increase warranty costs.
Breaches of our information system security measures could disrupt our internal operations.
We are dependent upon information technology (whether our own or those of our third-party service providers) for the distribution of information internally and also to our customers and suppliers. This information technology is subject to theft, damage or interruption from a variety of sources, including but not limited to malicious computer viruses, security breaches and defects in design. Purchase of our products may involve the transmission or storage of data, including in certain instances customers’ business and personally identifiable information. We also hold the sensitive personal data of our current and former employees, as well as proprietary information of our business, including strategic plans and intellectual property. Thus, maintaining the security of computers, computer networks and data storage resources is a critical issue for us and our customers and employees, as security breaches could result in vulnerabilities and loss of and/or unauthorized access to confidential information.
We and our third-party service providers have in the past experienced, and may in the future face, hackers, cybercriminals or others gainingunauthorized access to, or otherwise misusing, our systems to misappropriate our proprietary information and technology, interrupt our business, or gainunauthorized access to confidential information. For example, in August 2020, we detected a ransomware attack impacting certain of our operational and information technology systems. Promptly upon our detection of the attack, we launched an investigation, notified law enforcement and engaged the services of specialized legal
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counsel and other incident response professionals. While we were able to recover our critical operational data and business systems, there is no guarantee that we will have similar success with an attack in the future should one occur. Any such future attack could lead to the public disclosure of customer or employee data, our trade secrets or other intellectual property, or material financial and other information related to our business. The release of any of this information could have a material adverse effect on our business, reputation, and financial condition.
The reliability and security of our information technology infrastructure and software, and our ability to expand and continually update technologies in response to our changing needs is critical to our business. To the extent that any disruptions or security breaches result in a loss or damage to our data, it could cause harm to our reputation or brand. This could: (i) lead some customers to stop purchasing our products and reduce or delay future purchases of our products or lead to the use of competing products; (ii) lead to private causes of action that could result in a judgment, settlement or other liability; (iii) lead to state or federal enforcement actions, which could result in fines, penalties or other liabilities and which may cause us to incur legal fees and costs; or (iv) result in additional costs associated with responding to a cyberattack. Increased regulation regarding cybersecurity may increase our costs of compliance, including fines and penalties, as well as costs of cybersecurity audits and insurance. Any of these actions could materially adversely impact our business, financial condition and results of operations.
We have invested in protections and monitoring practices of our data and information technology to reduce these risks and continue to monitor our systems on an ongoing basis for any current or potential threats. There can be no assurance, however, that our efforts will prevent breakdowns or breaches to our or our third-party service providers’ databases or systems that could adversely affect our business and financial condition.
Damage to our computer infrastructure and software systems or the unsuccessful adoption or incorporation of new technology, such as artificial intelligence (“AI”), could harm our business.
The unavailability of any of our primary information management systems for any significant period of time could have an adverse effect on our operations. In particular, our ability to deliver products to our customers when needed, collect our receivables and manage inventory levels successfully largely depend on the efficient operation of our computer hardware and software systems. Through information management systems, we provide inventory availability to our sales and operating personnel, improve customer service through better order and product reference data, and monitor results of operations. Difficulties associated with upgrades, installations of major software or hardware, and integration with new systems could lead to business interruptions that could harm our reputation, increase our operating costs, and decrease our profitability. In addition, these systems are vulnerable to, among other things, damage or interruption from power loss, computer system and network failures, loss of telecommunications services, operator negligence, physical and electronic loss of data, or security breaches and computer viruses.
We have contracted with third-party service providers that provide us with redundant data center services in the event that our major information management systems are damaged, but they may prove to be inadequate. Our inability to restore data completely and accurately could lead to inaccurate and/or untimely financial reporting, tax filings with the Internal Revenue Service (“IRS”) or other required filings, all of which could have a significant negative impact on our business, and result in fines or penalties.
In addition, we may incorporate new technology, automation and traditional and generative AI solutions into our information systems, products, offerings, services and features, and these solutions may become important in our operations over time. The ever-increasing use and evolution of technology, including cloud-based computing and AI, creates opportunities for the potential loss or misuse of personal data that forms part of any data set and was collected, used, stored, or transferred to run our business, and unintentional dissemination or intentionaldestruction of confidential information stored in our or our third party providers’ systems, portable media or storage devices, which may result in significantly increased business and security costs, a damaged reputation, administrative penalties, or costs related to defending legal claims. If the content, analyses, or recommendations that AI programs assist in producing are or are alleged to be deficient, inaccurate, or biased, or if such programs misuse proprietary or confidential information or infringe third-party rights, our business, financial condition, and results of operations and our reputation may be adversely affected. AI programs may be costly and require significant expertise to develop, may be difficult to set up and manage, and require periodic upgrades. There is also a risk that we may not have access to the technology and qualified AI personnel resources to adequately incorporate ongoing advancements into our AI initiatives, including access to the licensing of key intellectual property from third parties. Our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Our competition may have access to greater financial and technological resources, giving them a competitive advantage in recruiting, motivating, and retaining sought-after AI
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professionals. There are legal and regulatory risks associated with the implementation of AI solutions, including compliance costs and enforcement exposure. Additionally, AI also presents emerging ethical issues and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution of AI, including potential government regulation of AI, will require significant resources to develop, test and maintain our platform, offerings, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact.
Our enterprise resource planning technologies (“ERP Systems”) will require maintenance or replacement in order to allow us to continue to operate and manage critical aspects of our business.
We rely heavily on ERP Systems from third parties in order to operate and manage critical internal functions of our business, including accounting, order management, procurement, and transactional entry and approval. Certain of our ERP Systems are no longer supported by their vendor, are reaching the end of their useful life or are in need of significant updates to adequately perform the functions we require. We have limited access to support for older software versions and may be unable to repair the hardware required to run certain ERP Systems on a timely basis due to the unavailability of replacement parts. In addition, we face operational vulnerabilities due to limited access to software patches and software updates on any software that is no longer supported by their vendor. We have started implementing a multi-year plan to upgrade and rationalize the hardware and software platforms used in our ERP Systems.
If our ERP Systems become unavailable due to extended outages or interruptions, because they are no longer available on commercially reasonable terms or if we are unable to successfully implement our upgrade and rationalization plan, our operational efficiency could be harmed and we may face increased replacement costs. We may also face extended recovery time in the event of a system failure due to lack of resources to troubleshoot and resolve such issues. Our ability to manage our operations could be interrupted and our order management processes and customer support functions could be impaired until equivalent services are identified, obtained and implemented on commercially reasonable terms, all of which could adversely affect our business, results of operations and financial condition.
We have identified material weaknesses in our internal control over financial reporting and, if our remediation of these material weaknesses is not effective, or if we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately or timely report our results of operations.
We have identified the following deficiencies in our control activities that constitute material weaknesses either individually or in the aggregate, as of December 31, 2025. The Company did not design, implement and maintain effective information technology general controls for information systems and applications or related business process controls, including journal entry controls, at Harvey Building Products Corp. and Mueller Supply Company, Inc., each of which were acquired in 2024. The presence of this material weakness creates a reasonable possibility that a material misstatement to the consolidated financial statements could occur and not be prevented or detected on a timely basis. However, no such material misstatement has occurred to date.
We are taking steps to address the control issues related to these business units, including the development of a remediation plan.
Additionally, in the course of preparing our financial statements for the interim period ended September 28, 2024, management identified a material weakness in our internal control over financial reporting that arose from the ineffective application of the software development life cycle (“SDLC”) information technology general control, and existed due to the implementation of a new ERP System within the Metal Solutions reportable segmen t. The presence of this material weakness creates a reasonable possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis. However, no such material misstatement has occurred to date.
We have taken and continue to take steps to address the control issues identified related to the SDLC information technology general control, including the implementation of a remediation plan. The remediation plan includes (i) retaining an outside firm with expertise in the design and execution of SDLCs to examine our control design, perform a root cause analysis, and advise on changes in the design of our controls and procedures and implementation of our remediation activities, (ii) completing a post-implementation review of the ERP System that led to the material weakness, (iii) updating and implementing a more comprehensive SDLC policy document, including standardized templates, (iv) establishing a formal governance structure to be adhered to for each qualified SDLC project, and (v) conducting targeted training to reinforce policy updates and foster awareness.
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While we believe that these efforts will remediate the material weakness identified related to the SDLC information technology general control, the implementation of these measures is ongoing and will require validation and testing of the design and operating effectiveness over a sustained period of financial reporting cycles.
We cannot assure you that the measures we have taken to date, and that we are continuing to implement, will be sufficient to remediate the material weaknesses we have identified or that we will not uncover additional material weaknesses in the future. If the steps we take do not remediate the material weaknesses in a timely manner, there could continue to be a reasonable possibility that these control deficiencies or others could result in a material misstatement of our consolidated financial statements that would not be prevented or detected on a timely basis. If such material misstatements were not prevented or detected on a timely basis, or if we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately or timely report our results of operations, which could have a material adverse effect on our business, results of operations, and financial condition.
We may be significantly affected by new or stricter regulatory standards on sustainability matters, and by global climate change.
We expect that regulatory standards on topics such as climate change, greenhouse gas (“GHG”) emissions, water usage, waste management, human capital, and risk oversight will continue to evolve. Implementation of new and/or stricter regulatory standards could expand the nature, scope, and complexity of what we are required to comply with, control, assess, and report. Such changes could increase the cost of our compliance and internal risk management programs, which could have a material adverse effect on our business, results of operations, and financial condition.
For example, in recent years, the State of California has passed various climate legislation that requires or in the future will require certain U.S. companies with business activities in California to provide disclosures related to their GHG emissions, climate-related financial risks and any voluntary carbon offsets or climate related claims. While enforcement of the California legislation remains uncertain, such legislation, and any adoption of similar regulations in other U.S. states and/or Canada and Mexico, may increase the resources we will need to allocate for compliance. In addition, any other future, more stringent federal, regional, state and foreign laws and regulations relating to global climate change and GHG emissions, if adopted, could impact our manufacturing operations, raw material suppliers, the transportation and distribution of our products, and our customers’ businesses.
Further, global climate change may increase the frequency or intensity of extreme weather-related events, such as storms, floods, hurricanes, wildfires, extreme temperatures, and other events that could affect our facilities and, workforce, supply chain, and demand for our products, which could have a material adverse effect on our business, results of operations, and financial condition.
We face risks related to our international operations.
In addition to the U.S., we operate our business in certain foreign jurisdictions, principally in Canada and Mexico, and make sales in certain other jurisdictions, which poses certain risks to our business, including foreign exchange rate and international legal compliance risks.
Our operations in Canada generated 7.5% of our net sales in 2025. As such, our net sales, earnings and cash flow are exposed to risk from changes in foreign exchange rates, which can be difficult to mitigate. Depending on the direction of changes relative to the U.S. dollar, Canadian dollar values can increase or decrease the reported values of our net assets and results of operations. We hedge this foreign currency exposure by evaluating the usage of certain derivative instruments which hedge certain, but not all, underlying economic exposures.
Our international operations require us to comply with certain U.S. and international laws, such as import/export laws and regulations, anti-boycott laws, anti-dumping laws, economic sanctions, laws and regulations, the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws. Any changes in export control or sanctions regulations may restrict the import or export of certain of our products or services, and the possibility of such changes requires constant monitoring to ensure we remain compliant with all applicable laws and regulations. Any restrictions on the import or export of our products or product lines could have a material and adverse effect on our competitive position, business, financial condition and results of operations.
In recent years, the U.S. government has announced and, in some cases implemented, new approaches to trade policy, including renegotiating, or potentially terminating, certain existing bilateral or multi-lateral trade agreements, such as the
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U.S.-Mexico-Canada Agreement (which is up for review in 2026). The second Trump administration has also imposed tariffs, and has proposed additional tariffs, on certain foreign goods, including finished products and raw materials such as steel and aluminum. Although some countries, such as Canada and Mexico, are exempt from certain of these tariffs, and a portion of these tariffs have been temporarily suspended, other parts of these tariffs remain in effect, and it is unclear how long such exemptions or temporary suspensions will remain in effect. These and other changes in U.S. trade policy or in laws and policies governing foreign trade, manufacturing, development and investment in the territories where we currently have international operations, and any resulting negative sentiments toward, or reciprocal tariffs on, the United States as a result could have a material and adverse impact on our business, financial condition and results of operations.
In addition, we operate in parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-bribery laws has proved challenging historically. We cannot provide absolute assurance that our internal controls and procedures will always prevent reckless or criminal acts by our employees or agents, or that the operations of acquired businesses will have been conducted in accordance with our policies and applicable regulations. If we are found to be liable for violations of these laws (either due to our own acts, out of inadvertence or due to the acts or inadvertence of others), we could suffercriminal or civil penalties or other sanctions, including limitations on our ability to conduct our business, which could have a material and adverse effect on our business, financial condition and results of operations.
Significant changes in factors and assumptions used to measure our defined benefit plan obligations, actual investment returns on pension assets and other factors could negatively impact our results of operations and cash flows.
The recognition of costs and liabilities associated with our pension plans for financial reporting purposes is affected by assumptions made by management and used by actuaries engaged by us to calculate the benefit obligations and the expenses recognized for these plans. The inputs used in developing the required estimates are calculated using a number of assumptions, which represent management’s best estimate of the future. The assumptions that have the most significant impact on reported results are the discount rate, the estimated long-term return on plan assets for the funded plans, retirement rates, and mortality rates. These assumptions are generally updated annually.
Changes in interest rates, mortality assumptions and asset performance may affect the funded status of our pension plans. Funding requirements for our pension plans may become more significant. If our cash flows and capital resources are insufficient to fund our pension plan obligations, we could be forced to reduce or delay investments and capital expenditures, seek additional capital, or restructure or refinance our indebtedness.
Any impairment of our goodwill, intangible or other long-lived assets could negatively impact our results of operations and financial condition.
We evaluate assets on our Consolidated Balance Sheets, including goodwill, intangible and other long-lived assets, annually, in the case of goodwill, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. We monitor factors or indicators, such as unfavorable variances from forecasted cash flows, and external market conditions that would require an impairment test. For example, during the third quarter of the year ended December 31, 2025, we recorded a goodwill impairment charge of $372.3 million related to our Windows & Doors–U.S. reporting unit. During the year ended December 31, 2024, we recognized goodwill impairmentlosses of $866.1 million, consisting of $496.1 million to our Windows & Doors–U.S. reporting unit, $329.1 million to our Siding & Accessories–U.S. Siding reporting unit and $40.8 million to our Siding & Accessories–Stone reporting unit. In addition, during 2024, we recognized impairment charges at our Siding & Accessories–Stone reporting unit of $32.7 million, $24.2 million and $11.8 million related to intangible assets, property, plant and equipment and right-of-use assets, respectively.
We may experience unforeseen events in the future, that could adversely affect the value of our goodwill, intangible assets or other long-lived assets and trigger other interim impairment evaluations. There can be no assurance that valuation multiples will not decline, discount rates will not increase, or the earnings, book values or projected earnings and cash flows of the Company’s reporting units will not decline. Future determinations of significant impairments of goodwill, intangible assets or other long-lived assets as a result of an impairment test or any accelerated amortization of our long-lived assets could have a negative impact on the Company’s business, results of operations and financial condition.
See Note 6 – Goodwill and Intangible Assets in our Consolidated Financial Statements located in Part II, Item 8 of this Form 10-K for additional information.
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Risks Related to our Sole Stockholder
The interests of our controlling stockholder may differ from the interests of holders of our indebtedness.
Following the Merger (as defined herein), investment funds managed by Clayton, Dubilier and Rice, LLC (“CD&R”) own all of the Company’s outstanding capital stock and have the ability to appoint the members of our Board of Directors. As a result, CD&R has significant influence over our business. The interests of CD&R may differ from those of holders of our outstanding indebtedness in material respects. For example, CD&R may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their overall equity investment, even though such transactions might involve risks to holders of our outstanding indebtedness. CD&R is in the business of making investments in companies, and may from time to time in the future, acquire interests in businesses that directly or indirectly compete with certain portions of our business or are our suppliers or customers. The companies in which CD&R invests may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. Additionally, CD&R may determine that the disposition of some or all of their interests in the Company would be beneficial to them at a time when such disposition could be detrimental to the holders of our outstanding indebtedness.
Risks Related to our Indebtedness and Liquidity
We have substantial debt and may incur substantial additional debt, which could adversely affect our financial health, reduce our profitability, limit our ability to obtain financing in the future and pursue certain business opportunities and make payments on our indebtedness.
As of December 31, 2025, we had outstanding principal on long-term debt totaling $4.8 billion.
The amount of our debt or other similar obligations could have important consequences for us, including, but not limited to:
• A substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes;
• Our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or general corporate purposes and our ability to satisfy our obligations with respect to our outstanding indebtedness may be impaired in the future;
• We are exposed to the risk of increased interest rates because a portion of our borrowings is at variable rates of interest;
• We may be at a competitive disadvantage compared to our competitors with less debt or with comparable debt at more favorable interest rates and who, as a result, may be better positioned to withstand economic downturns;
• Our ability to refinance indebtedness may be limited or the associated costs may increase;
• Our ability to engage in acquisitions without raising additional equity or obtaining additional debt financing may be limited in the future;
• It may be more difficult for us to satisfy our obligations to our creditors, resulting in possible defaults on and acceleration of such indebtedness;
• We may be more vulnerable to general adverse economic and industry conditions; and
• Our flexibility to adjust to changing market conditions and our ability to withstand competitive pressures could be limited, or we may be prevented from making capital investments that are necessary or important to our operations, growth strategy or efforts to improve operating margins of our business units.
If we cannot service our debt, we will be forced to take actions such as reducing or delaying acquisitions and/or capital expenditures, selling assets, restructuring or refinancing our debt or seeking additional equity capital. We can give no assurance that we can do any of these things on satisfactory terms or at all.
Further, the terms of the Cash Flow Credit Agreement, the ABL Credit Agreement, the Side Car Term Loan Credit Agreement (each as defined in Note 9 — Debt ), the August 2028 Indenture (as defined below), January 2029 Indenture (as defined below) and August 2029 Indenture (as defined below) provide us and our subsidiaries with the flexibility to incur a substantial amount of additional secured or unsecured indebtedness in the future if we or our subsidiaries are in compliance with certain incurrence ratios set forth therein. Any such incurrence of additional indebtedness may increase the risks created by our current substantial indebtedness. As of December 31, 2025, we were able to borrow up to(i) $850.0 million under the ABL Facility (as defined in Note 9 — Debt ), (ii) $95.0 million under the ABL FILO Facility (as defined in Note 9 — Debt ) and (iii) $92.0 million under the Cash Flow Revolver (as defined in Note 9 — Debt ). Borrowings under the ABL Facility, the ABL FILO Facility and the Cash Flow Revolver would be secured.
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The Cash Flow Credit Agreement, the ABL Credit Agreement, the Side Car Term Loan Credit Agreement, and the indenture governing the terms of our 8.750% Senior Secured Notes (the “August 2028 Indenture”), the indenture governing the terms of our 6.125% Senior Notes (the “January 2029 Indenture”), and the indenture governing the terms of our and 9.500% Senior Secured Notes (the “August 2029 Indenture”) contain restrictions and limitations that could significantly impact our ability and the ability of most of our subsidiaries to engage in certain business and financial transactions.
The Cash Flow Credit Agreement, the ABL Credit Agreement, the Side Car Term Loan Credit Agreement, the August 2028 Indenture, the January 2029 Indenture and the August 2029 Indenture contain restrictive covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to:
• Incur additional indebtedness or issue certain preferred shares;
• Pay dividends, redeem stock or make other distributions in respect of capital stock;
• Repurchase, prepay or redeem our subordinated indebtedness;
• Make investments;
• Incur additional liens;
• Transfer or sell assets;
• Create restrictions on the ability of our restricted subsidiaries to pay dividends to us or make other intercompany transfers;
• Make negative pledges;
• Consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
• Enter into certain transactions with our affiliates; and
• Designate subsidiaries as unrestricted subsidiaries.
In addition, the Cash Flow Revolver requires us to maintain a maximum total secured leverage ratio under certain circumstances, and the ABL Facility require us to maintain a minimum consolidated fixed charge coverage ratio under certain circumstances. The ABL Credit Agreement also contains other covenants customary for asset-based facilities of this nature. Our ability to borrow additional amounts under the Cash Flow Revolver and the ABL Facility depends upon satisfaction of these covenants. Events beyond our control can affect our ability to meet these covenants.
We are required to make mandatory pre-payments under the Cash Flow Credit Agreement, the Side Car Term Loan Credit Agreement and the ABL Credit Agreement upon the occurrence of certain events, including the sale of assets and the issuance of debt, in each case subject to certain limitations and conditions set forth in the Cash Flow Credit Agreement, the Side Car Term Loan Agreement and the ABL Credit Agreement. In addition, under the Cash Flow Credit Agreement, the Side Car Term Loan Credit Agreement, the August 2028 Indenture, the January 2029 Indenture and the August 2029 Indenture, we are required to reinvest or repay debt in an amount equal to the proceeds of divestitures within 18 months of the closing date of such divestiture. There can be no assurance that we will have the funds necessary to comply with the requirement and that the failure to comply may have a materially adverse effect on our business, financial condition and results of operations.
In addition, under certain circumstances and subject to the limitations set forth in the Cash Flow Credit Agreement and the Current Term Loan Facility (as defined in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” ) may require us to make prepayments of the term loans to the extent we generate excess positive cash flow each year.
Any future financing arrangements entered into by us may also contain similar covenants and restrictions. As a result of these covenants and restrictions, we may be limited in our ability to plan for or react to market conditions or to meet extraordinary capital needs or otherwise restricted in our activities. These covenants and restrictions could also adversely affect our ability to finance our future operations or capital needs or to engage in other business activities that would be in our interest.
Our failure to comply with obligations under the Cash Flow Credit Agreement, the ABL Credit Agreement, the Side Car Term Loan Credit Agreement, the August 2028 Indenture, the January 2029 Indenture or the August 2029 Indenture as well as others contained in any future debt instruments from time to time, may result in an event of default under the Cash Flow Credit Agreement, the ABL Credit Agreement, the Side Car Term Loan Credit Agreement, the August 2028 Indenture, the January 2029 Indenture or the August 2029 Indenture, as applicable. A default, if not cured or waived, may permit acceleration of our indebtedness. If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on
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terms favorable to us or at all. If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our business, results of operations, financial condition and cash flows could be adversely affected.
An increase in interest rates would increase the cost of servicing our debt and could reduce our profitability, decrease our liquidity and impact our solvency.
Our indebtedness under the Cash Flow Facilities, the ABL Facilities and the Side Car Term Loan Facility, due August 2028 (each as defined in Note 9 — Debt ) bears interest at variable rates, and our future indebtedness may bear interest at variable rates. As a result, increases in interest rates could increase the cost of servicing such debt and materially reduce our profitability and cash flows. While the Board of Governors of the U.S. Federal Reserve System lowered interest rates slightly multiple times in 2025, it may raise interest rates again in the future based on U.S government policies and/or macroeconomic conditions. As of December 31, 2025, assuming all Cash Flow Revolver and ABL Facilities revolving loans were fully drawn and SOFR exceeded 0.00%, each one percent change in interest rates would result in an approximately $10.4 million change in annual interest expense on the Side Car Term Loan Facility, the Cash Flow Revolver and the ABL Facilities (excluding the impact of any Company hedging arrangements). The impact of such an increase would be more significant for us than it would be for some other companies because of our substantial debt.
In addition, an increase in interest rates would generally lead to a decline in residential and commercial new construction starts and residential repair and remodeling activity, which could adversely affect our business, financial condition and results of operations. See Risk Factor “ Our industry is highly sensitive to macroeconomic conditions. Negative economic events including, but not limited to, actual or perceived economic downturns, lower business and consumer confidence, high interest rates, inflation, and lower new construction starts and repair and remodeling activity may materially and adversely affect the outlook for our business, financial condition and results of operations.”
We may have future capital needs and may not be able to obtain additional financing on acceptable terms or at all.
Although we believe that our current cash position and the additional committed funding available under the ABL Facilities and the Cash Flow Revolver is sufficient for our current operations, any reductions in our available borrowing capacity, or our inability to renew or replace our debt facilities, when required or when business conditions warrant, could have a material adverse effect on our business, financial condition and results of operations. Our ability to secure additional financing or financing on favorable terms and to satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our future operating performance, the availability of credit generally, economic and market conditions and financial, business and other factors, many of which are beyond our control.
If financing is not available when needed, or is available on unfavorable terms, we may be unable to take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations. If we raise additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution.
Our credit ratings are important to our cost of capital. The major debt rating agencies routinely evaluate our debt based on a number of factors, which include financial strength and business risk as well as transparency with rating agencies and timeliness of financial reporting. A downgrade in our debt rating could result in increased interest and other expenses on our existing variable interest rate debt, and could result in increased interest and other financing expenses on future borrowings. Downgrades in our debt rating could also restrict our access to capital markets and affect the value and marketability of our outstanding notes.
Our ability to access future financing also may be dependent on regulatory restrictions applicable to banks and other institutions subject to U.S. federal banking regulations, even if the market would otherwise be willing to provide such financing.
• Our Siding & Accessories reportable segment offers a broad suite of products and accessories at multiple price-points for the residential new construction and repair and remodel end markets. Our main products include vinyl siding and accessories, cellular PVC trim, vinyl fencing and railing, stone veneer and gutter protection products.
• In our Metal Solutions reportable segment, we design, engineer, manufacture and distribute an extensive line of metal products for the low-rise commercial construction market under multiple brand names and through a nationwide network of manufacturing plants, distribution centers and retail branches. We define low-rise commercial construction as building applications of up to five stories.
Costs related to other business activities, primarily our corporate headquarters functions, are disclosed separately from the three reportable segments as “Corporate and Other.” See Note 18 – Reportable Segment and Geographical Information , in our Consolidated Financial Statements located in Part II, Item 8 of this Form 10-K for additional information.
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Significant Business Developments
Our significant business development activities in 2025 and 2024 included:
• In April 2024, we completed the acquisition of Harvey Building Products Corp. (“Harvey”), a manufacturer of high performing windows and doors which include the brands Harvey, Softlite and Thermo-Tech.
• In July 2024, we completed the acquisition of Mueller Supply Company, Inc. (“Mueller”), a leading manufacturer of residential metal roofing and components in steel buildings.
• In September 2025, we completed the acquisition of Metal Sales Manufacturing Corporation (“Metal Sales”), a leading manufacturer of metal building systems and components.
The impact of acquisitions and divestitures, when presented, is quantified as the portion of the preceding twelve months post- or pre-transaction where no comparable period is available.
Tariffs
We are navigating through several external factors that create uncertainty and volatility in our operating environment, including, but not limited to, new tariffs and evolving trade policy. These rapidly changing policies and dynamics pose a risk to our supply chain and cost structure. Any new tariffs and/or trade restrictions that may be implemented could result in reduced overall economic activity and increased costs in operating our business, which, if unmitigated, could have a material adverse effect on our business, financial condition, and results of operations.
Goodwill Impairment
Our 2025 and 2024 results reflect goodwill impairmentlosses of $372.3 million and $866.1 million, respectively. In the second half of both 2025 and 2024, we assessed the changes in circumstances that occurred during the period to determine if it was more likely than not that the fair values of any reporting units were below their carrying amounts. While there was no single determinative event or factor, the consideration in totality of several factors, including, among others: (i) the recessionary impacts on residential and commercial markets; (ii) elevated interest rates and home affordability concerns, (iii) the potential for new or modified tariffs on steel and aluminum, and (iv) the decline in home equity borrowings is anticipated to have a considerable effect on the repair and remodel market, led us to conclude the impairment tests were necessary.
See Critical Accounting Estimates within this item and Note 6 – Goodwill and Intangible Assets in Item 8, Financial Statements and Supplementary Data, to the consolidated financial statements for additional information.
Financial Measures
Seasonality
Our sales volume is generally higher during our second and third quarters, which is historically the peak season for new construction and repair and remodeling in North America. Seasonal variations in our operational results may be impacted by inclement weather and other conditions. Working capital requirements have generally been greatest during the first half of our fiscal year due to the timing of the buildup of inventory to support the heavier construction season.
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Results of Operations
This section of the Form 10-K includes a comparison of 2025 to 2024. A similar discussion and analysis that compares 2024 to 2023 may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of Cornerstone Building Brands’ Annual Report on Form 10-K for the year ended December 31, 2024.
The following table represents key results of operations on a consolidated basis for the periods indicated:
Year Ended
($ Amounts in thousands)
December 31, 2025
December 31, 2024
Net sales
Gross profit
% of net sales
Selling, general and administrative expenses
% of net sales
Impairment of goodwill, intangible assets and property, plant and equipment
Loss from operations
% of net sales
Interest expense
Bargain purchase gain
Foreign exchange gain (loss)
Other income, net
Loss before income taxes
Income tax benefit
Net loss
Non-GAAP financial measure – Adjusted EBITDA*
% of net sales
* Refer to Non-GAAP Financial Measures for further discussion.
Net sales for 2025 increased $111.1 million, or 2.1%, compared to 2024, mainly due to the strategic acquisitions of Harvey in April 2024, Mueller in July 2024 and Metal Sales in September 2025, partially offset by lower volumes across all reportable segments due to constrained market conditions.
Gross profit as a percentage of net sales was 19.0% for 2025 compared to 20.7% for 2024. The decrease in margin was primarily driven by lower average selling prices, higher manufacturing input costs due to inflation and reduced operating leverage resulting from lower sales volumes.
Selling, general and administrative expenses increased $63.8 million, or 6.3%, for 2025 compared to 2024. The Company incurred higher employee-related expenses and depreciation and amortization during the current year primarily due to the acquisitions of Harvey and Mueller during 2024 and Metal Sales in September 2025. These increases are partially offset by a reduction in sales and incentive compensation related costs due to reduced volumes, excluding acquisition impacts.
Impairment of goodwill, intangible assets and property, plant and equipment for 2025 consists of impairment charges for goodwill of $372.3 million related to our Windows & Doors–U.S. reporting unit. Impairment for 2024 consists of impairment charges for goodwill of $866.1 million, intangibles of $32.7 million, property plant and equipment of $24.2 million and lease right-of-use assets of $11.8 million, primarily related to our Siding & Accessories–U.S. reporting unit, in addition to our Siding & Accessories–Stone and Windows & Doors–U.S reporting units.
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Interest expense increased by $41.9 million, or 9.3%, for 2025 compared to 2024. The following table sets forth the components of interest expense:
Year Ended
(Amounts in thousands)
December 31, 2025
December 31, 2024
Interest on outstanding borrowings (1)
Cash impact of interest rate swaps
Amortization of interest rate swap fair value (2)
Amortization of debt discount, debt issuance costs and purchase accounting fair value adjustment (2)
Other
Total interest expense
(1) Interest expense on outstanding borrowings increased primarily due to the timing of borrowings, as outstanding borrowings were higher for a greater portion of the current year.
(2) The fair value adjustments were made in connection with the Merger in July 2022.
Bargain purchase gain of $45.8 million represents the excess of the fair value of the net assets acquired in our acquisition of Metal Sales over the consideration transferred to the seller, and largely was attributable to the fair value of the real property acquired. The Company believes the bargain purchase gain resulted from an opportunistic transaction.
Foreign exchange gain (loss) for the years 2025 and 2024 are attributable to foreign exchange rate changes on intercompany loans based in Canadian currency.
Other income, net for 2025 decreased $2.3 million compared to 2024 primarily due to a decrease in interest income earned on our cash equivalents year over year.
Income tax benefiteffective tax rate was 18.6% in 2025 and 9.3% in 2024. The change was mainly due to a decrease in pre-tax book losses during 2025 compared to 2024, partially offset by the bargain purchase gain in 2025, and the tax impacts associated with the reduction of the goodwill impairment in 2025 compared to the goodwill impairment recorded in 2024.
The One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation, among other tax changes. Many of the tax provisions of the OBBBA are designed to accelerate tax deductions, which led to lower cash tax payments for 2025. The enactment did not have a material impact on our effective tax rate for the year-ended December 31, 2025. The Company continues to evaluate the impact on its overall financial position.
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Reportable Segment Results of Operations
The following table sets forth the results of continuing operations for our reportable segments:
Year Ended
(Amounts in thousands)
December 31, 2025
December 31, 2024
Reportable segment net sales:
Windows & Doors
Siding & Accessories
Metal Solutions
Intersegment net sales
Total net sales
Net sales, third party customers:
Windows & Doors
Siding & Accessories
Metal Solutions
Total net sales
Reportable segment adjusted EBITDA*
Windows & Doors
Siding & Accessories
Metal Solutions
Corporate and Other
Impairment of goodwill, intangible assets and property, plant and equipment
Depreciation and amortization
Loss from operations
* Refer to Non-GAAP Financial Measures for further discussion.
Windows & Doors
The following table sets forth the continuing results of operations for the Windows & Doors reportable segment:
Year Ended
($ Amounts in thousands)
December 31, 2025
December 31, 2024
Reportable segment net sales
Net sales, third party customers
Reportable segment adjusted EBITDA*
% of net sales
Depreciation and amortization
* Refer to Non-GAAP Financial Measures for further discussion.
Reportable segment net sales for 2025 decreased $28.0 million, or 1.1%, compared to 2024 mainly driven by lower volumes and unfavorable price net of inflation, partially offset by the strategic acquisition of Harvey in April 2024.
Reportable segment adjusted EBITDA for 2025 decreased $100.2 million compared to 2024 mainly driven by lower volumes and material inflation, partially offset by manufacturing net efficiencies and the strategic acquisition of Harvey in April 2024.
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Siding & Accessories
The following table sets forth the continuing results of operations for the Siding & Accessories reportable segment:
Year Ended
($ Amounts in thousands)
December 31, 2025
December 31, 2024
Reportable segment net sales
Net sales, third party customers
Reportable segment adjusted EBITDA*
% of net sales
Depreciation and amortization
* Refer to Non-GAAP Financial Measures for further discussion.
Reportable segment net sales for 2025 decreased $104.7 million, or 8.3%, compared to 2024 mainly driven by lower volumes, partially offset by favorable product mix.
Reportable segment adjusted EBITDA for 2025 decreased $42.4 million, compared to 2024 mainly driven by lower volumes and material inflation, partially offset by manufacturing net efficiencies and decreased selling, general and administrative expenses.
Metal Solutions
The following table sets forth the continuing results of operations for the Metal Solutions reportable segment:
Year Ended
($ Amounts in thousands)
December 31, 2025
December 31, 2024
Reportable segment net sales
Net sales, third party customers
Reportable segment adjusted EBITDA*
% of net sales
Depreciation and amortization
* Refer to Non-GAAP Financial Measures for further discussion.
Reportable segment net sales for 2025 increased $243.3 million, or 15.8%, compared to 2024 mainly driven by the strategic acquisitions of Mueller in July 2024 and Metal Sales in September 2025, partially offset by lower average selling prices.
Reportable segment adjusted EBITDA for 2025 increased $9.9 million, compared to 2024 mainly due to the acquisitions of Mueller in July 2024 and Metal Sales in September 2025. These benefits were largely offset by weaker market conditions and lower average selling prices, net of inflation.
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Corporate and Other
The following table sets forth the continuing operations for Corporate and Other:
Year Ended
(Amounts in thousands)
December 31, 2025
December 31, 2024
Corporate costs
Strategic development and acquisition related costs (1)
Long-term incentive plan compensation (2)
Amortization of acquisition related step-up adjustments (3)
Facility closure charges and employee separation (4)
Other (5)
Total Corporate and Other
* Refer to Non-GAAP Financial Measures for further discussion.
(1) Costs related to strategic projects, acquisitions and merger activity.
(2) Represents charges related to the Company’s equity-based compensation plans, including the effects of employee terminations.
(3) Costs associated with non-cash purchase accounting valuations for lease right-of-use assets and inventory.
(4) Represents charges related to the Company’s manufacturing footprint and certain employee separation costs.
(5) Represents charges related to legal fees and settlements, a fair value adjustment related to contingent consideration on the M.A.C. Métal Architectural Inc. (“MAC Metal”) acquisition and non-recurring costs associated with replacing our Chief Executive Officer during the current year.
Depreciation and Amortization
The following table sets forth depreciation and amortization:
Year Ended
(Amounts in thousands)
December 31, 2025
December 31, 2024
Depreciation:
Cost of sales
Selling, general and administrative expenses
Total depreciation
Amortization - Selling, general and administrative expenses
Total depreciation and amortization
Depreciation and amortization increased by $39.8 million for 2025, mainly due to the acquisitions of Harvey in April 2024, Mueller in July 2024 and Metal Sales in September 2025.
Non-GAAP Financial Measures
We use several measures derived from consolidated financial information, but not presented in our Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the U.S (“U.S. GAAP”). These measures are considered non-GAAP financial measures. Specifically, in this report, we refer to adjusted EBITDA, which is a non-GAAP financial measure. Our non-GAAP financial measure is not intended to replace the presentation of the comparable measure under U.S. GAAP. However, we believe the presentation of the non-GAAP financial measure, when considered together with the comparable U.S. GAAP financial measure, along with a reconciliation to its respective U.S. GAAP financial measure, assists investors in understanding the factors and trends affecting our underlying business that could not be obtained absent these disclosures. Additionally, we believe that the presentation of our non-GAAP financial measure enables investors to evaluate trends in the business excluding certain items which are not entirely a result of our base operations.
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Furthermore, the presentation of this non-GAAP financial measure supplements other metrics we use to internally evaluate our business and facilitates the comparison of past and present operations. The non-GAAP financial measure we use may differ from non-GAAP financial measures used by other companies, and other companies may not define non-GAAP financial measures we use in the same way.
Reconciliation of Net Loss to Adjusted EBITDA
The following table presents the reconciliation of net loss to Adjusted EBITDA:
Year Ended
(Amounts in thousands)
December 31, 2025
December 31, 2024
Net loss
Interest expense
Bargain purchase gain
Foreign exchange (gain) loss
Other income, net
Income tax benefit
Loss from operations
Depreciation and amortization
Impairment of goodwill, intangible assets and property, plant and equipment
Strategic development and acquisition related costs (1)
Long-term incentive plan compensation (2)
Amortization of acquisition related step-up adjustments (3)
Facility closure charges and employee separation (4)
Other (5)
Adjusted EBITDA
(1) Costs related to strategic projects, acquisitions and merger activity.
(2) Represents charges related to the Company’s equity-based compensation plans.
(3) Costs associated with non-cash purchase accounting valuations for lease right-of-use assets and inventory.
(4) Represents charges related to the Company’s manufacturing footprint and certain employee separation costs.
(5) Represents charges related to legal fees and settlements, a fair value adjustment related to contingent consideration on the MAC Metal acquisition and non-recurring costs associated with replacing our Chief Executive Officer during the current year.
Liquidity and Capital Resources
Our main liquidity and capital resource needs are payments to service our debt, ongoing operations and working capital requirements, capital expenditures and the cost of acquisitions. Our primary source of liquidity is cash generated from our continuing operations and borrowings under our credit facilities. We believe that funds provided by these sources will be adequate to meet our liquidity and capital resource needs for at least the next 12 months under current operating conditions.
We may from time to time take steps to reduce our debt. These actions may include repurchases or opportunistic refinancing of debt. The amount of debt, if any, that may be repurchased or refinanced will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants and other considerations. Our affiliates may also purchase our debt from time to time, through open market purchases or other transactions. In such cases, our debt may not be retired, in which case we would continue to pay interest in accordance with the terms of such debt, and we would continue to reflect the debt as outstanding in our Consolidated Balance Sheets.
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The following table sets forth our total net liquidity position as of December 31, 2025:
Borrowing base adjustments related to asset-based lending facility (4)
Available revolving credit facilities
Net liquidity
(1) In January 2026, the Company borrowed $65.0 million under the asset-based lending facility.
(2) In January 2026, the Company borrowed $25.0 million under the cash flow revolving facility.
(3) As of December 31, 2025, we had standby letters of credit serving as a collateral for insurance carriers in the amount of $56.0 million.
(4) The borrowing base under the ABL Facilities is determined by a monthly borrowing base collateral calculation that is based on specified percentages of the previous month’s value of eligible inventory, accounts receivable, less certain allowances and subject to certain other adjustments. As of December 31, 2025, the Company’s total lender commitments under the asset-based lending facility and the first-in-last-out tranche asset-based lending facility were $945.0 million, however the borrowing base was less than the total commitments, which resulted in a borrowing base adjustment.
Cash Flows
Year Ended
(Amounts in thousands)
December 31, 2025
December 31, 2024
Net cash flows provided by (used in) operating activities
Net cash used in investing activities
Net cash flows provided by financing activities
* Refer to Non-GAAP Financial Measures for further discussion.
Cash Flows From Operating Activities
During 2025, net cash used in operating activities was $18.8 million, compared to net cash provided by operating activities of $15.8 million in the prior year. The increase in net cash used is due to a lower gross margin, higher cash-based interest, unfavorable working capital, partially offset by lower income taxes paid.
Cash Flows Used in Investing Activities
Our main uses of cash for investing activities are for payments for property and equipment and acquisitions of businesses.
Net cash used in investing activities was $345.2 million during 2025, compared to $1,134.5 million used in investing activities during 2024. The $789.3 million decrease is driven by the acquisitions of Harvey and Mueller during the prior year partially offset by the acquisitions of Metal Sales and Cold Rolled Steel, LLC (“Cold Rolled Steel”) during the current year and reduced spending on capital expenditures during the current year compared to the prior year.
Cash Flows From Financing Activities
Our main uses of cash for financing activities include activity to repurchase and make payments on our long-term debt and distributions to our direct parent Camelot Return Intermediate Holdings, LLC (“Camelot Parent”). Our main sources of cash from financing activities include the proceeds from issuances of debt.
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Net cash provided by financing activities was $344.5 million during 2025 compared to $814.8 million provided by financing activities during 2024. The decrease of $470.3 million in net cash provided is mainly driven by a $503.8 million decrease in net borrowings from our term loan facility in the current year and $500.0 million of long-term borrowings through the issuance of the 9.500% Senior Secured Notes during the prior year, partially offset by a $295.0 million increase in net borrowings under our revolving credit facilities in the current year and a dividend payment of $231.6 million made to Camelot parent during the prior year.
Contractual and Off Balance Sheet Obligations
We have leases for certain manufacturing, warehouse, distribution locations, offices, vehicles and equipment. Our property leases generally contain renewal and escalation clauses and other concessions. These provisions are considered in our calculation of our minimum lease payments that are recognized as expense on a straight-line basis over the applicable lease term. Any lease payments that are based upon an existing index or rate are included in our minimum lease payment calculations. As of December 31, 2025, the Company had total future lease payments of $625.4 million, with $127.4 million payable within 12 months. See Note 8 — Leases in the Notes to the Consolidated Financial Statements for additional information. We have certain long-term debt instruments outstanding. As of December 31, 2025, the Company had total future payments of $4.8 billion, with $34.0 million payable within 12 months. See Note 9 — Debt in the Notes to the Consolidated Financial Statements for additional information.
Critical Accounting Estimates
Our significant accounting policies are described in Note 2 — Significant Accounting Policies , to our Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. The Consolidated Financial Statements are prepared in conformity with U.S GAAP. Preparation of the financial statements requires us to make judgments, estimates and assumptions that affect the amounts of assets and liabilities reflected in the financial statements and net sales and expenses reported for the relevant reporting periods. We believe the policies discussed below are the Company’s critical accounting policies as they include the more significant, subjective and complex judgments and estimates made when preparing our consolidated financial statements. While our estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions.
Accounting for Business Combinations
Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets and liabilities of the acquired business. For most assets and liabilities, purchase price allocation is accomplished by recording the asset or liability at its estimated fair value. The most difficult estimations of individual fair values are those involving property, plant and equipment and identifiable intangible assets. We must also refine these estimates over a one-year measurement period, to reflect any new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.
These fair market value assessments require judgments and estimates that can be affected by various factors over time, which may cause final amounts to be materially adjusted from original estimates in subsequent periods. The significant judgments include (i) the estimation of future cash flows, which are dependent on forecasts, (ii) the estimation of a long-term rate of growth, (iii) the estimation of the useful life of the assets, and (iv) the determination of a risk-adjusted weighted average cost of capital. When appropriate, our estimates of the acquired fair values include assistance from an independent third-party.
Inventories, long-lived assets (primarily property, plant and equipment), goodwill, and intangible assets generally represent the largest components of our acquisitions. In addition, we also acquire other categories of assets and liabilities which can include, but are not limited to, accounts receivable, accounts payable and other working capital. Due to their short-term nature, the fair values of these assets and liabilities generally approximate the carrying values reflected on the acquired balance sheet. However, when appropriate, we adjust these carrying values for factors such as collectability, existence, and consistency with Company accounting policies. We record the excess of consideration transferred over the fair value of the identifiable net assets acquired as goodwill. Any excess of the fair value of the net assets acquired over the consideration transferred to the seller is recorded as a bargain purchase gain.
The Company acquired Metal Sales in September 2025, and the Company recognized a bargain purchase gain of $45.8 million related to this acquisition. Refer to Note 3 — Mergers, Acquisitions and Divestitures to our Consolidated Financial Statements for additional details.
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Impairment of Goodwill
We have six reporting units comprised of “Windows & Doors–U.S.,” “Windows & Doors–Canada,” “Siding & Accessories–U.S. Siding,” “Siding & Accessories–Canada,” “Siding & Solutions–Stone” and “Metal Solutions.” Windows & Doors–U.S. and Windows & Doors–Canada reporting units are part of the Windows & Doors reportable segment. Siding & Accessories–U.S. Siding, Siding & Accessories–Canada and Siding & Accessories–Stone are part of the Siding & Accessories reportable segment. The goodwill balance is attributable to four reporting units, which had an aggregate carrying amount of $739.4 million as of December 31, 2025. There is no goodwill remaining at the Windows & Doors–U.S. and Siding & Accessories–Stone reporting units. An annual assessment of the reporting units for impairment is conducted as of the first day of November. Additionally, more frequent evaluations are undertaken if events or circumstances suggest that the fair value of a reporting unit is likely to be less than its carrying amount. Such events and circumstances may encompass sustained increases in competition, unexpectedlosses in market share, input costs surpassing projections, disposals of significant components of the business, unforeseen business disruptions (such as those caused by natural disasters or the loss of a customer, supplier, or other significant business relationships), unexpected significant declines in operating results, or substantial adverse changes in the markets in which the entity operates.
The Company determined that an interim goodwill impairment test was necessary in the third quarter of 2025. While there was no single determinative event or factor, management considered the cumulative impact of several factors, including, among others: (i) the recessionary impacts on residential and commercial markets; (ii) elevated interest rates and home affordability concerns, (iii) the potential for new or modified tariffs on steel and aluminum, and (iv) the decline in home equity borrowing activity expected to have a considerable effect on the repair and remodel market. Based on our assessment, we concluded that it was more likely than not that the fair value of our Windows & Doors–U.S. reporting unit was below its carrying amount. Additionally, the Company completed its annual goodwill impairment tests in the fourth quarter of 2025.
The impairment test for reporting units involves comparing the estimated fair value of each reporting unit with its carrying amount. Should the carrying amount of a reporting unit exceed its estimated fair value, an impairmentloss is recorded. This loss is determined based on the difference between the fair value and the carrying amount of the reporting units, not to exceed the associated carrying amount of goodwill.
As detailed in Note 6 — Goodwill and Intangible Assets in Item 8, Financial Statements and Supplementary Data, we recorded an impairmentloss of $372.3 million for the year ended December 31, 2025 in our Windows & Doors–U.S. reporting unit. The Windows & Doors–U.S. reporting unit was written down to its fair value resulting in zero excess fair value over its carrying amount as of its latest impairment testing date. As of December 31, 2025, all reporting units with goodwill have minimum 23% excess fair value over their carrying amounts as of their latest testing date.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. The discounted cash flow method under the income approach is generally employed to estimate the fair value of the reporting units. Additionally, the guideline public company method and the guideline transaction method are utilized under the market approach. Significant assumptions inherent in estimating fair values include the projected future annual net cash flows for each reporting unit, encompassing net sales, cost of sales, selling, general and administrative expenses, depreciation and amortization, working capital, and capital expenditures. Other critical assumptions involve income tax rates, long-term growth rates, and a discount rate that appropriately reflects the risks inherent in each future cash flow stream. The assumptions utilized in financial forecasts are selected based on historical data, supplemented by current and anticipated market conditions, estimated growth rates, management’s strategic plans, and guideline companies.
Assumptions utilized in impairment testing are determined at a specific point in time and necessitate considerable judgment; consequently, they are subject to modification based on the prevailing facts and circumstances at each annual and interim impairment test date. Furthermore, these assumptions are typically interdependent and do not change in isolation. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, change, or if management’s expectations or plans otherwise change, including as a result of the development of our five-year operating plan, then one or more of our reporting units might become impaired in the future.
Impairment of Long-Lived Assets
We review the carrying value of our long-lived assets, including finite-lived intangibles, property, plant, and equipment, and right-of-use assets, for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The policy ensures that our financial statements reflect the accurate value of our assets and comply with relevant accounting standards. Indicators of impairment may include, but are not limited to:
• Significant underperformance relative to historical or projected future operating results.
• Significant changes in the manner of use of the assets or the strategy for the overall business.
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• Significant negative industry or economic trends.
• Significant decline in the market value of the asset.
• Legal factors, including changes in regulations affecting the asset.
We define our asset groups at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets. Given the importance of the brands, customer relationships, executive and functional management and integrated support services, the Company has defined its asset groups are consistent with our reporting units, which include: Windows & Doors–U.S., Siding & Accessories–U.S. Siding, Siding & Accessories–Stone, Metal Solutions, Windows & Doors–Canada, and Siding & Accessories–Canada.
When an indicator of impairment is identified, we perform a recoverability test by comparing the carrying amount of the asset or asset group to the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount exceeds the undiscounted cash flows, an impairmentloss is recognized. The impairmentloss is measured as the amount by which the carrying amount of the asset exceeds its fair value, determined based on the asset’s market value, if an active market exists, or future. The impairmentloss is recognized in the income statement.
Fair value is determined based on the asset's market value, if an active market exists, or we use future undiscounted cash flows over the asset’s useful life to determine if an asset is impaired. The discount rate is adjusted to reflect risks specific to the asset and the time value of money. The Company believes it uses reasonable and supportable assumptions for future cash flows, including assumptions related to the discount rate.
In the third quarter of 2025, in conjunction with the Company’s interim goodwill test mentioned above, the Company performed a recoverability analysis for the Windows & Doors–U.S asset group. The undiscounted future cash flow analysis resulted in significant excess of fair value over carrying amount and no impairments of long-lived assets were recorded. There were no indicators of impairment identified during the fourth quarter of 2025, and there was no long-lived asset impairment recognized in 2025.
The Company will continue to monitor the recoverability of its long-lived assets for its other assets groups and will perform impairment tests if events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
The Company assumptions utilized in the impairment testing are determined at a specific point in time and necessitate considerable judgment; consequently, they are subject to modification based on the prevailing facts and circumstances at each balance sheet date. Furthermore, these assumptions are typically interdependent and do not change in isolation.
Product Warranties
The Company sells a number of products and offers a number of warranties. The specific terms and conditions of these warranties vary depending on the product sold. As of December 31, 2025, the Company’s product warranty liability was $188.8 million, with most of the liability recognized in our Windows & Doors and Siding & Accessories reportable segments. Factors that affect the Company’s warranty liabilities include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. Warranties are normally limited to replacement or service of defective components for the original customer. Some warranties are transferable to subsequent owners. Transferable warranties are generally limited to ten years from the date of manufacture or require pro-rata payments from the customer. A provision for estimated warranty costs is recorded based on historical experience and the Company periodically adjusts these provisions to reflect actual experience. The Company assesses the adequacy of the recorded warranty claims and adjusts the amounts as necessary.
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Income Taxes
The determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. The amount recorded in our Consolidated Financial Statements reflects estimates of final amounts due to timing of completion and filing of actual income tax returns. Estimates are required with respect to, among other things, the potential utilization of operating and capital loss carry-forwards for federal, state, and foreign income tax purposes and valuation allowances required, if any, for tax assets that may not be realized in the future. We recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the Consolidated Financial Statements from such a position are measured based on the largest benefit that is more-likely-than-not to be realized upon ultimate settlement. We establish allowances when, despite our belief that our tax return positions are fully supportable, certain positions could be challenged, and the positions may not be fully sustained. Our provision for income taxes reflects a combination of income earned and taxed in the various U.S. federal and state, Canadian federal and provincial and other jurisdictions. Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals for tax contingencies or valuation allowances, and the change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.
As of December 31, 2025, the $36.9 million net operating loss carryforward included $20.7 million for U.S federal losses and $16.2 million for U.S. state losses. The state net operating loss carryforwards began to expire in 2025, if unused, and the federal and foreign loss carryforwards will begin to expire in 2031, if unused. There are limitations on the utilization of certain net operating losses.
