All right, guys. We are going to kick things off. Sorry about the late start. The elevator has been rough. We got the Trex team. Adam D. Zambanini is the Chief Executive Officer of the company. Trex has had an outsized growth year, Adam, and very timely with the leadership change. I guess help us think through what is driving the growth. I think you have talked a lot about converting wood again, right?
What are some initiatives you guys are doing that is Trex specific, that is accelerating that growth profile this year?
Yeah. Well, thank you for that question. Yeah. When you get back to it was back to basics. If 75% of the market is wood, and so 1% share away from wood is $80 million in revenue. What can we do to get back there? When I analyzed the data the last several years, I was not seeing us bring in that wood consumer. Why I believe that is really effective is it creates a halo for Trex. Bringing in that wood consumer, what they realize is once you move from wood to Trex, right? Your substructure costs are the same, your labor is the same, your fasteners are about the same. It is not that much to trade them up into other product lines at Trex. You get into railing, you get into fascia, you get into lighting, you get into higher ends of decking.
We are focusing on the marketing side of showing the consumer the differences in those costs. We are also leveraging AI, so there is more visualizers that are being built with AI, where you can take your wood deck, and you can scroll across and see what your deck looks like versus what a Trex composite deck is. We focus a lot on product invention and a lot of the things that have to do with an install. If you think about installing a deck or a rail, if you look at guidelines out in the marketplace, the handbook to install a deck or rail is about that thick. It is really intimidating for consumers. There is a lot more education out there on YouTube to show them how to install a deck. Also, all of our products have really been made DIY friendly.
We're number one in wood alternative railing. It's our fastest growing segment. When you look at the product lines and what we have, everything's more or less preassembled now on the railing side of the business. We have the posts that already have the brackets on there. You drop the panels in, four screws, and you're complete. We've tried to make that whole consumer journey seamless, so that from the time they visualize their deck to the time they go out there and acquire their deck, we make it easier. There's been a lot more. We raised SG&A the end of last year to upwards of 18%. That was a one-time adjustment for Trex, but a lot of it had to do with going out there and getting our message across to the consumer as to why they want to move away from wood.
Outside of branding, what else is on the table that perhaps you're doing differently this year?
I'm sorry, outside of what?
Outside of step-up in marketing and branding to refocus.
Yeah. We refocused also on my number two core value is obsess over the customer. The idea is to find a solution with that customer and how we can expand over time. There were some things that we had to do from a rebates and discounts perspective. That was a one-time one-up on there. If we did it again, would we take pricing? Sure, we would. This is one of those ones that we needed to do to remain competitive within the marketplace. We changed what the structure was there. We also offer a lot more marketing tools for that customer. We are going out there. We go and analyze no matter where you are at. You could be in Milwaukee, Wisconsin. We go into that dealer.
We basically give them a marketing package as to what they need to do to drive more consumers or more contractors within the door. We have also experienced a lot of change in our media plans. There is a lot more tied to sporting events, which you see a lot more contractors that watch the sporting events, but you also have a lot of consumers there. We have tried to pick more high, impactful places that Trex can be seen. We have signed an agreement with Martha Stewart. Martha Stewart has built two Trex decks here in New England, and we are using her as an influencer for Trex. We have gone out there in a bigger way. I just feel like my background has been sales and marketing.
We need to take a one-time step up in what we can do to create that exposure in, that big bang effect, and get people to move over from wood, but also create more awareness on the Trex side of the portfolio. We were great on the conversion side and the digital campaign, but we needed a lot more on the awareness side. If you are out there, you are seeing a lot of Trex advertisements this year.
Great. It seems like these investments are really paying off. I think the last quarter was one of the few quarters you have talked about that entry level customer coming back. Momentum has been good. Have you seen that momentum continue into August? Certainly, the macro backdrop is just pretty choppy right now.
Yeah. We have seen that momentum continue into August. As we go out to 2030, we want to be a $2 billion company. We have been hanging around $1.1 billion, about a compounded annual growth rate of 11%. Getting back to that wood growth, that helps in terms of the absorption that we need. We think over time, we drive more absorption. We can expand margin over time. We are on track to where we need to be. We have seen a solid order book through Q2, which was a record quarter. We saw it again in July. We are seeing it continue through the August timeframe. We feel that that has helped fuel the growth, getting that wood consumer. There is a lot of opportunity. We made some distribution changes in the July timeframe.
With those distribution changes, we are able to get some distributors to move away from tertiary brands, let us just say the number four, number five brand in decking and railing, and getting them to move over in Trex. We have talked about that as well. That is another $100 million opportunity for Trex to grow over the next two years on top of the wood conversion.
It is exciting. With you taking on the Chief Executive Officer role, you kind of rebuilt and refreshed your executive leadership. You actually have a Chief Marketing Officer, I believe, for the first time. With this newer leadership team, what are some of the things that, in the past you would not have been able to do or initiatives you are looking to drive in terms of unlocking value and certainly hitting that $2 billion target?
Yeah. I consolidated or flattened out my organization. When I look at it, I only have five direct reports now. We just recently hired a Chief Commercial Officer. The idea there is they are focused on sales, marketing, and the digital experience. They have IT, which is fairly unique in this, because I think digital transformation is where we need to go into the future in terms of being tied to the consumer, tied to the contractor. I am now spending more time as to where we need to be three, four, five years out, and I think that is what Trex has needed, a little bit more visionary focus as to what happens next. When you look at our growth targets of that $2 billion by 2030, about two-thirds of that is organic growth, one-third is M&A. I have been spending a lot of time on M&A.
We have an M&A roadmap. What we call our strategy right now is String of Pearls. From an M&A perspective, we are looking at three different areas there. First would be, how do you expand margins? Our fastest growing category has been railing. There is a lot of opportunity with the growth that we have been driving in railing to expand margins over time. The railing fleet gross margin average is below where decking is, and the idea is over the next five years, we want the fleet gross margin average to be the same. Vertical integration would be the first thing. The second thing would be the backyard. Anything from the threshold of the door all the way out to the fence, what would be a great acquisition? Who has got a great product but they do not have the distribution and they do not have the brand?
We think we can drive that. The third piece of this would be the envelope of the house. We are very focused on, that could be siding and trim. Areas that we could grow beyond repair or remodel. We are 95% repair or remodel. We would like to take that and find areas that we can get more into new construction. I have been really focused on what other areas or what other legs of the stool that we can do to build Trex here as we think longer term beyond $2 billion. How do we get to $3 billion? How do we get to $4 billion?
On the railing side, it has been a nice growth opportunity and we are seeing it, but it has had an impact on gross margins. You talked about M&A and vertical integration. Is that more on the raw material integration side, or you need more scale through bolt-ons?
It is a little bit of both. The one thing about Trex is about 70% of cost of goods are tied to raw materials. I always say you either innovate your way there through raw materials and you find unique things that you can do with the material to make it that you can extract more value and expand margins over time, or you can find ways to leverage that raw material set to lower the cost structure and expand margins over time. Now that we are finally driving some nice volume in railing, we are number one in wood alternative railing, and there is really nobody close to us in terms of category, size, and scale in what we have to offer. We are able to really leverage those assets. Some of those assets are older assets that can be modified. They can run faster over time.
We are working on speed and how to get more output out of those assets with the more volume there. Some of it has to do with our railing. When we first built it out, it was such a small business, we had it in several different buildings. We want to streamline those into one building and then streamline our labor within that building. Some of that will be happening over the next five years there. The size, the scales, how we get more output from the assets. The same thing that we did on the decking strategy. If you look at how our margins expanded on decking from 2010 - 2020, we are literally applying our same strategy on the railing side of the business.
Okay, great. You have kind of hinted on M&A. You talked about it again, possibly expanding to these new adjacencies. First off, I guess, how has your philosophy on M&A changed? I think Trex's approach before, there were a lot of governors just given the bar was so high. One, how has your approach changed?
As you expanded into these new adjacencies, will they be more bolt-ons or more transformative, like fencing or building envelope?
Yeah. The first thing is we call our strategy String of Pearls. It will be more, I would say, bolt-ons here over time as we want to continue to grow here. When we start to think about M&A, I think the one thing that has kind of locked us out, I have been at Trex now for 21 years, is we have been so focused on margin percentage, EBITDA margin percentage, gross margin percentage, that essentially we would acquire nobody. We have looked at our metrics. We have changed them a little bit. We are really focused on EBITDA dollars. We are really focused on return on invested capital. We want to find things that are definitely accretive to our company and how we can expand and grow over time.
We will continue to see margins go up over time from where we are today over a five-year period, but we don't want to get so locked in that we pass up on really good opportunities. When I think about it in the past, maybe there was some good opportunities that we passed up on. I think moving forward, by using the return on invested capital metric, that will be something that we're focused on that we think will help us to get into some other additional categories.
Okay. The railing opportunity was a good example where you could drive penetration. You're leveraging your same distribution base.
As you expand the outdoor living space with these new adjacencies on fencing-
How do you add value, and how much business do you need to have critical mass in that business?
Yeah. The thing about fencing what's nice is, we can utilize the same assets that we have here in Trex. Trex has spent about $500 million in a new facility down in Little Rock, Arkansas. If you think about where we can expand over time, the fastest growing part of the market is the Sun Belt, the southern part of the market, and the most cost that I have in my raw material set is on freight. Before Little Rock, Arkansas, we had to ship it to Virginia or Nevada, so there's a lot of cost there. From this perspective, when we think about filling these assets, fencing is a great opportunity. Building size and scale of around $100 million really does add tremendous value to utilizing those assets, and that's why that's an area that we want to grow in over time.
When I think about Little Rock, we've actually opened up that facility six months early ahead of time, and that's because we are converting more people to wood, and the fastest growing opportunity to convert people to wood is in the southern part of the U.S. So it kind of lines up perfectly with our strategy and it will help control our cost structure over time as well.
On Little Rock, I think the perception is it's all decking capacity. I think you kind of hinted already, there's ability to leverage that capacity in many different ways. Can you expand on that a little bit?
Yeah. The one reason we went to Little Rock, we ran out of space in Virginia, we ran out of space in Nevada, so we needed to find a new place to go. We looked at 105 different locations via a third party. We narrowed it down to four, and we landed in Little Rock. We love the labor pool. Trex is the best-paying manufacturer down there in Little Rock. We love the location. We can acquire a lot of raw materials down there. We also can supply the fastest-growing part of the market down there. When we look at that, it's, what can we get out of that facility? We have a large finished goods yard. We're already doing poly processing down there. We got the decking plant. But it doesn't take a lot to get into other additional things.
If we wanted to get into railing, we can expand our poly plant into railing asset plant. The nice thing is, there's a lot of flexibility into Little Rock. The decking plant that was built today was built for both phases. All the infrastructure, the $500 million that's been built for the decking plant, we can put on a whole another wave five years down the road of just adding lines into the same facility. All the infrastructure's been built out. The lines do not cost a lot of money in the whole scale of what we spent on the CapEx.
I think when you look about Trex is most of our CapEx spend is behind us when you think about it, and we can grow here over the next 10 years, and we can pretty much produce what the industry needs when you start to think about Trex. It's the, how do I get more capacity utilization over time? Getting into categories like fencing helps utilize those assets over time.
You could produce fencing product off a decking line.
You can. We can run fencing off a decking product line. I can even run some parts of fencing off a railing product line. However we can utilize the same assets is what we're interested in doing.
Adam, I think one of the pushback we have gotten, at least concerns from investors, with Little Rock would be a lot of capacity coming on. Does that mean Trex could be disruptive to the market in how you behave in pricing? Part of the reason why your multiple has always been high is just the growth and the margin profile.
Help us think through how are you going to manage that Little Rock business because you talked about gaining share and growing and running these lines fuller to get the operating leverage.
Yeah. I do call Little Rock our wood conversion engine. Okay? We do have something that nobody else has, and we will be aggressively priced versus wood because that is our biggest opportunity in terms of growing the company. We also can expand over time. When I think about pricing, this year was all about setting the foundation, making sure we can show we can bring the growth back to Trex, get to a point where we feel really comfortable we are going to get that wood conversion. Longer term, it is the how do we leverage price over time? We still see that middle-tier consumer and that upper-tier consumer willing to pay the money to invest into the composite decking.
As we think about 2027 on out, we will start to leverage pricing strategically in certain categories, more on railing, more in the middle to upper tiers of decking, more into fascia and all that. We will start to layer that in on top of the wood conversion as we bring more, drive more people, the consumers into the wood. Then the idea is that how do we trade them up to our upper-tier product lines and then leverage pricing over time? You will start to see there wasn't a lot of pricing in the market from Trex this year. You will start to see more as we move into 2027.
Super. You talked about free cash flow. Free cash flow could potentially really explode just because you're not going to need to spend much CapEx for the next, call it, 5+ year.
Yeah.
I think one of your investor deck you highlighted called about $1.6 billion of cash deployed in the next five years between M&A and buybacks.
That's a pretty substantial pivot. On the buyback side, any different approach in terms of how much and how you're going to approach it? Is it going to be more opportunistic, or it's going to be more programmatic?
We've been very opportunistic over the years. It'll be a little bit flexible. We'll be opportunistic, but then there'll be some that's programmatic over time. When we looked at the first six months of this year, about $150 million in terms of shares. We've talked about buying upwards of 150 in the back half of this year. So we're going to be a lot more aggressive in the buybacks. And the reason is we do think we're going to be expanding value over time in terms of where Trex is going to become a $2 billion company. We think margins are going to expand over time, and we think it's a great buy right now.
When we look at this, we will be a lot more aggressive in the share buybacks than we have been in the past, and there will be a lot deployed around share buybacks moving forward.
Okay, great. In terms of new products, you kind of ventured in a little bit on the PVC side on contract manufacturing. That's been a void. How do you want to tackle that going forward?
Yeah. The one thing I want my team to understand is if we're in decking and railing, we're going to be all in on decking and railing. I think the one thing in the past that we kind of let go was this whole PVC decking thing. On railing, we compete at every single level across railing. On decking, we compete at every single level. We have the most extensive line on decking outside of what was PVC decking. As I've come in there, I told my team we will offer everything. We will get into all the colors. We will offer all the profiles. We will go head-to-head because our competitor has about 75% market share within PVC decking, and it's the only reason they've grown is PVC decking.
The one category that we don't have is the one category that they've shown growth. Therefore, we will be all in on that moving forward, and that's where we will look at ways that we're going to expand margins over time. Right now, the idea is, from a sales and marketing perspective, is show that we can go out there, grow, take market share. We have a couple different ways that we can grow. One of them could be through organic, where we want to decide we want to do our own PVC decking plant. We could do that. We could decide we want to do M&A. That's another opportunity there in terms of how we expand into PVC decking. This is not going to be a category that we are not going to be in longer term.
We do want to be all in on this category. We want all the dealers to know, all the distributors to know we compete in every single segment within this decking and railing segment.
Okay, great. Margins did take a step back this year from the investments, and as you pointed out, perhaps underinvestment, and your focus is back to basics, and you're seeing the growth, which is great.
When we think about 2027 and beyond, what are the levers for margins?
I know, historically. Not historically. At one point, you generated 30% type EBITDA margins. It's a big number. How do you balance growth margins and, I guess, returns?
Yeah. I think the last four or five years since COVID, even during COVID, what happened is we took a lot of pricing. Many price increases over time, but we were not expanding any volume whatsoever, and that is not a good formula for Trex. It is great to take pricing, but we also have got to drive the volume because you are spending a lot of money on these assets. You are spending $500 million on these assets. You have got to run those assets. My idea here is to drive the volume back in the facilities, and that is where you are going to see some nice margin expansion as we move out into 2027. Layered on top of that would be pricing. You are going to see some pricing come on top of there.
We will be very strategic, and then I think you are going to have the third lever, which is product innovation. Anything that we can add more value from a product innovation perspective, we will also take some pricing from that perspective. I think those are the three areas where you will see some pricing come across from Trex.
Okay. That is great, pricing.
And margin expansion.
Very thoughtful on the pricing side. When we think about Little Rock, it has been kind of noisy just because the capitalization step-up and startup costs. When we think about 2027 and beyond, Adam, is it going to be just assuming the market grows?
Should we think of that as just accretive margins and operating leverage, or is there going to be some ramp-up period that we need to be appreciative of?
There is a ramp-up. I think we have talked about, there is about $7 million tied to startup costs in Little Rock. We will break those costs out. You will start to see some of those costs get broken out in Q3, and you will see some more broken out in Q4. As we get into 2027, it should be mostly a clean year from that perspective. The one thing is, we are bringing Little Rock up six months early, and the idea is we are getting more wood market share, so we are getting more of that growth, and then also to move into 2027 so it is pretty clean across the board. That will be our lowest manufacturing cost across the entire company.
When we built Little Rock, we put in our best technology, and the other thing you need is you need to have a lot of heating, you need to have a lot of cooling. Some of it has to do with size and scale of the facility. Our best operating plant was built in 2020 in Winchester, Virginia, and it by far exceeds our old plants by a lot. Let's just say double digits in terms of efficiencies there. We've built a bigger plant on top of what we built in Winchester down in Little Rock. Size and scale, that allows us to get more heat. That also allows us to get more cooling. Therefore, we can run faster, we can get better yields, better uptime, lower costs over time.
Plus, your raw material set is going to be lower cost because we're getting a lot out of that region. As we start to think over time, Little Rock will become more accretive over time. You'll probably see some of our manufacturing footprint shift as well. We'll have a little bit less production in Virginia, a little bit less production in Nevada, a little bit more in Little Rock. From that perspective, we think that is a great opportunity. Nobody else has production in the East Coast, Central, and West Coast in our entire category. We can really leverage freight. Freight is the biggest cost that we're seeing right now in 2026. We're seeing a lot of freight costs come through. We're going to be able to manage a little bit that better as we move out in 2027.
On the Boise transition to SBP.
Any updates you want to share with us in terms of how you're managing the drawdown inventory and load-in? Is this kind of how you expected?
Yeah. The timing of that was real strategic. We wanted to be first. We wanted to have the right distribution lined up. We also wanted to make sure that it was at the peak of the season, so we were getting through a lot of the inventory because we wanted to go into 2027 clean. We went back into dual distribution. We picked Specialty Building Products because they really are the largest in specialty building products. They have the most expertise. They went out and bought all the companies that had the best regional focus, the best branch in each one of those territories. When we look at it from this perspective, national accounts, which there has been a lot of consolidation on national accounts, Builders FirstSource, US LBM, Carter Lumber, 84 Lumber.
SBP has actually done better than the previous distributor in terms of what they did in terms of sales. As we think about this consolidation, we want to have partners that are a lot more creative, that are more supportive as to where the market is heading and going, and so we feel really good about this relationship with SBP. In addition, we have a lot of really good regional distributors, so that you are going to find some local pro lumber yards want to find the local distributor in that market. We have kept those local distributors in that market for some of those lumber yards.
The SBP relationship, they have been humongous. They have grown faster than the broader industry at large. How has that relation changed with this pivot? I know they picked up branches in OrePac, so were there more branches with them outside of that, or you just do more business per branch, I guess, with the SBP relationship?
Yeah. When we started looking at those territories, we were actually doing more business with SBP in some of those territories than we were with the other distributor. When we looked at the concentration over time, SBP was in 75% of the country before they bought OrePac, and we were doing almost the same amount of business that we were in 75% of the country than we were from a national distributor perspective. We look at OrePac being a really big boost upgrade. It is a great brand, great company on the West Coast. The other thing SBP brings to Trex is they are the only ones that really have a North American footprint. They actually do have a company in Canada that we sell to, Alexandria Moulding.
Some of the other distributors are pretty much just stuck here within here in the United States, and SBP does go a little bit beyond the borders there. From having a partner that's really aligned strategically in North America mattered to us as well.
With the distribution industry consolidating quite a bit to less people, retail getting bigger, and you talked about perhaps a bigger focus on dealers, what does that mean for Trex? How are you positioned? Is that a market we should be cautious on, or is that actually an opportunity?
Yeah. Here's the thing, when you start to look at it, still the fastest-growing part of the business, whether you look at the pro channel or retail, is on the home center side. Trex is one of the few brands in all of category, not just in building products, but in other categories, that is available at both retailers. When you think about the home center, Lowe's and The Home Depot, we're one of the few that's out there. We've really done a good job of building out those brands, offering them products that will help both of those businesses grow. We have a lot of experience within those home centers, and when I think about where you need to be aligned with the future, we're very strong in national accounts.
We're very strong with the home centers, and as you see more and more consolidation, I think you're going to see more of that share move towards Trex. We've seen that even on the distribution change that we recently made. One of the things we had in the last quarter's announcement is we see another $100 million worth of business moving away from tertiary brands over to Trex in the next two years. We're seeing more and more of that every single day.
We got a packed room. Any questions to the audience? Nobody, huh? Surprised. Please, Ted.
Can you give any insight into price of recycled material? Seeing Grade C going negative, actually, then B also coming down YoY. You guys see a negative price on the really dirty film, or just B also going?
The prices on film actually have been going down. I haven't seen negative pricing, though we've seen people that have got in. There has been a lot of chemical companies that got into recycling, that those facilities are now shutting down, because I think the administrations that you have, under the former administration, that made a lot of financial sense. Under this administration, it doesn't make financial sense. That has created more of a glut of recycled materials on the market. The only downside that we're seeing right now is the freight costs. The freight costs are a huge component into what we acquire in our raw materials, and those freight costs have really been going up month- by- month. I mentioned that probably as we were coming out of Q1. We saw a nice increase in Q2.
We're seeing a pretty significant increase as we move into Q3. I'm not worried about the acquiring of the raw materials. There's a lot of recycled plastic out on the market today, more than there was in the last two, three, four, five years. But the freight costs are the issue right now when I start to look at that.
That outweighs the fall in the glut.
It's been outweighing the fall in the glut, right. Yeah.
As it relates to PVC, if you guys get bigger in that market, what about recycling? Because PVC recycling's a little more tougher than polyethylene from what I understand.
Yeah. If we decided we want to get into PVC, we'd do the compounding, the recycling, everything. It'd have to be vertically integrated and what we would want to do longer term, because we want to be competitive with anybody within those segments or within that space. That's one of those ones, even if we decided we wanted to do it organically, that could take a little bit of time, but we would make sure that we'd have a fully vertically integrated facility if we wanted to go that route.
Okay. Questions, the audience. I got one more for you, Adam. You're a marketing innovation guy. You've been hinting at a new wow product that's going to change the game. Any themes that we should be focused on?
We're getting there. I think as we move through the end of Q3 or the end of Q4, we'll have some things that we'll be talking about in 2027 and where we want to go. Once again, I'm focused on really applications, not selling products. We've talked about marine, we've talked about fire, we've talked about heat mitigation, but I think there's definitely more things we can do from a raw material subset that the competition cannot do.
I also want to make sure, I tell people, "You can have all the products that you want in the world, but we need to have the intellectual properties tied to them." So my one focus to not hurry the whole thing up is to make sure that we got the intellectual properties tied around that, because I do think in some of the intellectual properties, it could expand into more things outside of where we want to go longer term. So that's the one thing, is to make sure we're all buttoned up before we go out and we want to announce something.
Okay. Mark.
Can you, let's just take the scenario where end market demand does not change for the next three years. It's like can you just talk to what type of growth in that environment would you look for that? Just wood replacement new products, any innovations?
Yeah. When we started this year, market growth was -1% to 1%. I'd say now I'm seeing reports it's around 2%. I think when you
Negative?
I'm sorry?
Negative or positive?
+ 2.
Okay.
I think that's what I'm seeing right now, which when you look at early in the year, people were saying later in the year it might get a little bit better. So I think it's improved from flat to low single digits. I think the idea for Trex, and we keep taking up our guidance. Now we went from 3% as the midpoint of our range to 5% of the midpoint of our range, but if I think about the next two or three years, we want to be mid to high single digit growth, and if we actually were able to get the market to get back to mid single digit growth, then Trex gets to double digit growth.
When I put in a flat tape.
In a flat tape, we want to be mid to high single digit growth.
That is possible?
We believe it is possible because of the wood conversion.
Right.
If we're not focused on the wood conversion, that would not be possible, and that's my whole thing to everybody that I've been talking about is we cannot just operate in the K-shaped economy. If we do not bring in that low-end consumer, you're not going to see the growth. The number one driver at TSR is growth, and Trex hasn't grown in the last three or four years. We need to prove to the market that we can grow, and we need to prove to the market we can expand margins while growing over time. That's what the focus is here at Trex.
If the, sorry, last thing, if mid to high is up to 6%.
Would two thirds of that be wood conversion and one third new products?
Yeah, I think that's fair in terms of how we would do that. Yeah, at least 50%. At least 50% would be wood conversion. But once again, if we can get to a market that, and this is where Trex was growing double digits. When you get to a market that's growing 4% or 5%, yeah, Trex can grow 10%, 11%, 12%. Let's just say repair/remodeling hasn't grown in the last three years. I don't know if it's going to grow, like what the end report will say this year, whether it was flat or it had slightly growth, but let's just say there is slight growth in the category this year. That makes me feel better about next year, that we're finally turning this thing around and we're heading in the right direction.
If we start to, once repair/remodeling gets going again, it is not like you are going to see this. You are going to start to see some nice growth rates out of this category. I think that is, I tell everybody, "Let us not wait for that to happen. Let us control our own destiny," and that is icing on the cake to see us get back to that mid-single digit growth from repair/remodeling.
All right, one last one.
Yeah, just quick. On the $100 million of tertiary brands that-
Yeah
You said are an opportunity for you-
What is the execution risk associated with that?
Yeah, that is a very conservative number. When I look at that number in terms of what we have taken out competitively, it is a much larger number. The $100 million is us factoring there is only a certain percentage of business that we will attain through that transition. In other words, I did not take out $100 million worth of business that was on the table. The number was bigger. There was a certain conversion factor that we used internally to basically tell the Street we feel comfortable in the next two years we will take $100 million worth of business. But we have not really shared as to what that number was in terms of the transition point.
Okay, great. Thank you, Adam.
Thank you.
Good job.