Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the TopBuild's First Quarter 2023 Earnings Release. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Tabitha Zane, Vice President, Investor Relations. Ms. you, Thank begin. may Zane, you

Tabitha Zane

Thank you, good morning. and

the Executive Officer; today Robert Financial are Chief and President Buck, and On Officer. call Rob Chief Kuhns,

the presentation well to of set morning's our filings senior and SEC. will including include Company's on We those formal which remarks as unknown website that are press risks statements, PowerPoint uncertainties, subject our Many posted this comments and the summarizes release forth topbuild.com. have at in in forward-looking as our known management's with a remarks and

Company update considered non-GAAP call The this of or forward-looking are measures isolation statements measures that assumes GAAP. in Please some financial with to a as or The on events. discussed will results because not intended untrue be substitute supplement to no obligation be for the of on to that a prepared accordance be subsequent note basis. become in non-GAAP

these in today's most a on the financial our be We to reconciliation found and release website. which press table have a quarter can in our also of provided presentation, measures first measures included GAAP comparable in

I will call over to the now Buck. Robert turn

Robert Buck

Good morning, today. joining and for you us thank

EBITDA specialty to pleased also our expanded first that report are is good distribution adjusted points to X.X% margins. XXXX basis and solid segments, XXX We with and start expanded adjusted business a quarter off installation increased to Revenue margin performance. a and EBITDA Both operating XX.X%. our

our to strong residential, industrial, performance focus both our acquisitions specialty platform. operations with have insight operational and strong distribution, onto we suppliers business, quarter-after-quarter direct and of our advanced approach integration the and diversified ERP of and our our end and our and commercial all markets, excellence; our uniquely with customers on consistently strategic and advantaged their our business Our model teams, and partnerships of a our installation facets efficiency into hard support result the is branch work command

large improvements to long-term buyer the This new the existing under are housing terms of by multifamily are supported benefiting backlog homes continue homes of we demographic of single is trends. the that construction, supports conviction business see both from supply of and in limited and strong, that fundamentals customers installation Our encouraged builder and steadfast and favorable our industry interest. our

Our to business and light commercial residential an benefiting is work. mentioned our also similar of perform installation before very of type and from are commercial either project. light are increase able most installation branches We've that in

the expansion, branches Dome corporate commercial a heavy also including the numerous City Lake in few. projects, Microsoft are Our and new Airport a to and name new Salt involved YouTube just long-running Intuit large and centers

identify additional and better light to growth branch salespeople help both initiatives and them support and tools been secure this our have opportunities resources encourage work. heavy we managers The commercial and and providing for commercial

rates. One of which dramatically and our May. our last lead and This tool leads cloud-based then to is project identifies sales our improving app win Day hub productivity sales opportunities, commercial these construction proprietary Investor out aggregates bid force showcased data pushed are at

focused efficient the better best tools We drive use of the labor within a all practices, sharing through financial construction tight industry, remains technology is strength a for of TopBuild. which management labor results. the on Direct remain but and proprietary continued productivity of process, highly sales and enhancing branch

time branches. the gives our advantage. us labor us In addition, and in among This monitor differentiator our advanced ability ERP real a is and a major share to competitive productivity system gives

X.X% increase Offsetting of in model the and shifted Overall, our Residential down sales commercial solid increased the business. and declined of demonstrating to sales volume industrial construction units has residential our contractor business decline Looking X.X%. specialty in distribution at smaller from multifamily. diversified volume and as levels customers mix stream brought distribution our inventory was a our distribution a channels. under

Austin alternative a XX. Taiwan projects teams Marathon the specialty of facilities manufacturing industrial major Phoenix. and in Tesla Other Gigafactory fuel projects, including Our long-running number for semiconductor are include manufacturing Phillips its and distribution supporting center in

Looking large industrial continue these and we to to commercial expect support ahead, projects.

recognizes the facilities in require. mechanical North our Our and that engineer leading us any customer we type product enable of America customers base of our and are XX America supplier customize North fabrication solutions insulation across to

growth, In both of billion this through very $X.X acquisitions. opportunities great addition, see only fragmented XX% we organically market share with market, and for

banking seen on not demand industrial in have markets in the an following or industry. impact commercial turmoil either the We recent the

robust, backlog installation projects and the bidding into On remains our late commercial XXXX and already are we XXXX. side, early

a see commercial planned and this stream We insulation. in as business. and opportunities giving of markets. and end specialty projects on mechanical sites distribution work optimistic a has been the remain we the continued for also revenue Maintenance repair and our demand revenue several distribution, the specialty industries, for recurring for commercial growth major scheduled, across should being serve For industrial stabilizing driver many lot diverse about both very industrial

increase have the Turning industry is both there traction. was down in some to cost of know batts Supply for to year. lines be bought expected for remain number to maintenance and production expect fiberglass. as you loosefill, December we of an tight Most during a which did

our contribute will our our component overall to of additions continue is capital growth SRI one which to of and to expected revenue. allocation business. remain the $XX and Acquisitions of million in important ahead, be quarter, acquisition Looking completed Holdings, We first a strategy approximately momentum key annual #X priority our

Florida, presence Ohio SRI our Michigan. is with to in a addition a great and strong installation Georgia, segment

practices do improve supply processes practices integration the company acquired optimize works fleet operational office immediately logistics a we newly redundancies, best team our to and chain, locally with onto empower productivity, great and share and eliminate and to streamline As and technology sales our incorporate labor close, best procedures, and back acquisitions leverage talent. upon all to

strong specialty our distributors will that returns our our installers are scale, for expand both shareholders. generate and growth base targets high-quality companies, Our and installation enhance focused customer

so and a installation we you in we if to We mix space and over quite Combined, prospects expect both have In expand in our opportunities a end residential, a all of these The presence a to of in combined $XX.X total long industrial. over through of target markets deals asked have represent which the three XX% organically robust year. and for to have this see answer is have they simply of close some acquisitions our of white we billion, terms number the no. addressable serve: business market commercial a expand. share. of plenty which of recent meetings, We pipeline term. of

of call first want has focus emphasize throughout is most to operational been key driving I component excellence to XXX-basis XXXX. since point one and great and Before over our remains that quarter Rob, important our execution margin and turning of the our expansion of a of organization adjusted areas EBITDA

to and, empower business local leaders branches, their distinct with plus our at locally direct XXX as We teams our operations to labor. responsibility. management, build P&L include run full branches installation sales leaders their Branch

leveraging At level, best the streamlining corporate and our chain achieved and by processes across practices, back-office operational entire procedures. supply efficiencies sharing efficiencies, are network

is at TopBuild. culture improve’ do inherent we everything to in ‘drive Our

Rob?

Rob Kuhns

good Thanks Robert, and morning everyone.

of strategically margins at execute adjusted Specialty to at strength as our a grew Installation Distribution. was evident The sales and model high both and strong advantaged EBITDA Robert noted, team we As our level, results. generating continues expanded

sales end solid our saw we addition, markets. across growth all diversified of In

I the an on will review to first our XXXX Moving overview with results, balance quarter and financials, outlook. update our start of sheet, you our

million, to our First $XXX.X segment sales sales with and sales X.X% X.X% increasing million. Distribution from increased quarter increasing installation to net to XX.X% billion, from Specialty $X.X $XXX.X

growth volume by higher decline driven a Robert were selling higher prices were sales strong Distribution's discussed by in prices. sales offset Specialty and which volume Installation's residential earlier. selling by driven

first margin was operational driven continued managing cost point a XX.X%, quarter in by leverage, was and gross adjusted XXX-basis expansion. inflation. for success the efficiencies, our fixed Our This

margin to XX.X% XXX-basis $XXX.X XX.X%, XXXX. adjusted a quarter to First compared was EBITDA EBITDA and adjusted quarter our improvement first point million increased

basis. First EBITDA a was quarter on and XX%, incremental branch same margin XX%

Specialty points, First points respectively. for segment segment, for Installation an margin and improvement was our quarter XX.X% XX.X% XXX-basis EBITDA XX-basis and adjusted of our Distribution

$XX from quarter as $XX expense rates. Interest the to in result a million variable increased interest million of higher primarily first

and debt with XXXX. XX% rates average cost with variable current Our X.XX% fixed upcoming until of is maturities approximately no approximately XX%

to and to related were and integration First acquisition Income quarter costs. million Net were $X.X adjustments

earnings adjusted share diluted were XX% quarter year. $X.XX, per First prior a increase from

cash increase quarter as was of of the cash in first XX.X% of balance $XXX.X flows, to Capital flow $XX.X and, we this quarter calls, mentioned to the operating Income a to by year. capital. Moving range compared are on end in sheet by an sales and targeting the in XX% This previous was and I've improvements XX% prior in Net million, was our million driven XX.X% year. working Working

in repurchase X.X% million, and We $XX.X our the quarter. was CapEx below not in the shares guidance. did quarter revenue, slightly of long-term any

a Robert prospects. As our working capital number one acquisitions robust are remain mentioned, pipeline we priority of allocation and

There adjusted to on under $XXX.X our were Total accessible with debt including ended debt leverage net cash no short-term at of our billion. significant debt structure X.XXx first EBITDA. just $XXX.X of and million XX changes and $X.X the outstanding March million, million. quarter an of remained balances long-term was We trailing and $XXX.X months XX, liquidity revolver XXXX,

are February quarter we our XXXX XX. guidance, on outlook on provided annual to reaffirming call fourth our Moving for

to billion and be adjusted expected range in between and total As $XXX $X.X million are the to $XXX million. reminder, a of sales to be $X.X EBITDA billion

We in to expect sales slower decline and that continue be mid back activity the to half our upper the will digits to year. residential single-family single of

have This public not share include to long-term believe and are the Our many expand the commercial of by end expectation sales and is the for our optimism to recent to are fundamentals acquisitions does expressed digits. markets we any outlook housing pleased solid industry for low repurchases. by the We potential mid-single builders. of industrial heard or

industrial also on in are end-markets. opportunities We long-term and commercial bullish the the

and structure outperform any TopBuild technology Our will continue that leadership tools, team, in will to flexible environment. ensure cost

Robert?

Robert Buck

many the avenues see the to ahead demonstrate unique opportunities multiple for in our growth. model of of and We operating advantages advantage our take year

improvement Distribution in each every control our of the our performing day-to-day plus into and are real-time enables gives areas advanced focus and opportunities performance Our in us cycle. branches. of continuous insight maximize of all the XXX to our system company and well, ERP Specialty on Installation great at Both us point

in survey Employer the industry, to Great participated Finally, our in evaluation, national rankings. Places our of of standard Work company in the and the drive TopBuild gold continuing Choice be to

day. potential. is company which Great direct a realize feedback, Work Places employees the diverse proud TopBuild The is positive where and the Being strive based to excited that, TopBuild a ratings are employee to a of organization. to feedback strengthen our to recognized we to We workforce speaks organization as every TopBuild and their recognized full our to commitment report on has from Work everyone endorsement as Places to entire and culture fostering opportunity a Great the inclusive direct

of all thank their for I work my hard and TopBuild dedication. teammates

to value, continuing Your focus service day safely to key working growth and deliver the quality on success. every is our customers our to continued and

Operator

Joe [Operator from Instructions] question Deutsche Our Ahlersmeyer Bank. first comes with

Joe Ahlersmeyer

the This in from congrats on is Ahlersmeyer quarter. And Deutsche results the Joe good Bank.

Robert Buck

Thanks, Joe.

Rob Kuhns

you. Thank

Joe Ahlersmeyer

outlook could just Maybe starts a maybe back if half data single single-family not the some given and family you the guidance for the revenue quarter slower expectation? industry to completions you broader or that could single-family the raise or be specifically, whether supportive of a half, to about with offer commentary here start expectation specific your by stabilization? talking in And context back a and decision strong of sort

Rob Kuhns

Rob. is this Yes, Joe,

about told got together. out So I'd of half weeks you, we we still when the of we ago expected year, back tell uncertainty there. right in lot XX The came from QX you a where what

family last really cautiously realistic hearing running. a we're what completions if that didn't knowing optimistic at significantly a two it's of need quarters, to below feel out builders, given we lot from the you for we're But starts single adjust we're there. optimism look the But So there. been the where too, guide have over

historically, forecast side. as through be And that's work conservative remind out going to we in just we starts will there. to upside way So a here the to the you management system. But lean uptick team, the I'll have its from that any meaningful

we're I future. the said, optimistic cautiously like So about

Robert Buck

And Joe, Robert. this is

we're really Just on what's to as And I commercial specs nice we're to coming and a hearing I the light other done builders, happening mean side. opportunities the to commercial add field team what like that. job the well. in seeing think more ground the well, on of the and point, relative to business. out industrial Rob's the as from has seeing

to lot be So upside out think positive there. our we that's going to Rob's only a there's And of signs guidance. to point,

Joe Ahlersmeyer

you just some the could had product All been think loosefill. discussion And about the encouraging. I the right. more about talk multifamily of any Very rest Understood. mix maybe requiring there considerations with year?

discuss the we relative to aware you pricing could for or other specifically any maybe multifamily considerations and the So maybe just loosefill supply/demand be batts of? should

Robert Buck

Yes.

-- again. think I is Robert this

the expect which from think I a that construction, does to loosefill, loosefill into we what's carry installation. multifamily We're to for as well. So through XXXX definitely great more given required relative backlog, shape to product require definitely multifamily perspective XXXX in

So shape in great that we're from perspective.

The that bidding thing field insight rates in teams the teams the the as well as one the are have -- bidding into doing. we great and of the is what backlog

piece we've think, half the really So the some about in we well share we in good that that and business. bid back what good the gain feel work we as, multifamily of got as captured

Operator

JPMorgan. Rehaut next with comes Our from question Mike

Mike Rehaut

quarter I a be question the just more bit there to your ago. starts what But more wanted you is the residential below outlook as hit, far, side. And referred, -- about reflects is Rob, year? year first around down little driving a will industrial so single-family on on you in think which the way on terms XXX, I the starts guidance my a As residential, for side. well to of second for First, an mechanical guess,

type there of accelerate sake progresses? implicit in as in of quarter the terms you fourth that for upside? And guys a say, some be would a second if event more quarter, year argument of for is or starts, for the So third starts let's really expectation

Rob Kuhns

the for the seen single-family We've Mike, Yes. we've multifamily, is between mean important had Rob. very multifamily. strong to look this it slowdown outbidding I is it's down strong. multifamily backlog there. been starts right? at great really ready The side. as think quarter comment I single-family data We multifamily, we break And getting and on for a So the remain

where given us the of the builders, in that of said, to were. couple what like would then today side, expect remainder obvious homes backlog really we field's are we the optimistic be here like But to hearing it's quarters, running single-family about So side through XX% of mean, starts, our earlier, that forecast happy I are on below And this last mentioned starts year. with an spec we're, the data, the starts increase cautiously last work we And things. the I on we're upside have potentially what I more where and completions now. more from from in right start

Mike Rehaut

reflect? I So for some just your at my Any hit modest Or color there? year? it question, Does levels of to second forecast rest be the does improvement? starts current clear type of before reflect remaining what the

Rob Kuhns

going meaningful out out there. the where it's like it to have say we mean modestly I have could is be said, range we flattish I'd or from Yes, are what direction we down given up downside in there. either upside today. But or to any I be movement

Mike Rehaut

commercial projects in about the the on does or How bidding referenced current would secondly, you Or helpful good in would color involvement level then into you Would side be there growth? translate you that 'XX. 'XX. any thinking activity and various well. -- terms any expect versus And expect given of of Great. trends, Okay. commercial as XXXX mechanical,

Robert Buck

Robert. Mike. Hi,

out work So mechanical of how can just what There's into you translate and side. this there the pent-up looks. future a industrial the I lot would say, on

we industrial, things slower if you seeing think projects talked both And about in new 'XX, come, think about I and was we're a the as space. that onshoring, If recover. now to some -- beverage little about food those 'XX, projects,

chemical that into business, really revenue, some engineer going on recurring really benefit those we this how see We a is such why we 'XX. that here what we there MRO products or given And other the about recurring situation But much net MRO coming big big revenue. allows to a of side, side MRO and also love we're earlier. is capabilities, there any then 'XX, projects why that the We so lot that's refineries, which which us unique player on work on fabrication our there's capitalize talked about for there out in scheduled.

we have that business -- in reasons. can positive yes, from tell very you industrial for those my outlook a mechanical the side So a of comments,

Operator

Baumgarten Zelman. question comes next Our from with Adam

Adam Baumgarten

Just business. pricing you're in curious residential what Has the of a perspective of seeing been that's from kind norm? any kind there of sprouting up outside competition the

Robert Buck

Adam, Yes, Robert. this is

things perspective, of that have and think pretty So material look, tightness tightness of relative been I steady the from to given continued that. labor

value construction that I there we are chain well. I realize in think builders cycle, also the a as given the think from where

nothing perspective. price great to think for look out bringing at say job that value have field get from I well, volume working done the the you teams as I'd and balance our to of again, So of that stuff that walking the if results, of ordinary our And customer. a the we're

Adam Baumgarten

good hear. how the also additional guys for it. Got the that Okay. increases just the balance you That's I price just of side, on of are prospect Yes. fiberglass on year? the thinking about guess to

Robert Buck

Yes.

previously, to As moderate expected the said year. inflation this we we

think there. I still there's some inflation

I about first the manufacturers, think the some -- in results other you fiberglass also quarter. from saw they previous the talked price of public

So half it will the be curve, depend on what of I look starts the it to that the But we stabilized. expect back all year. demand think to like

I cost think the increase could any that from perspective. drive future action

Operator

from with Our Keith Securities. next Truist comes question Hughes

Keith Hughes

about the year any growth in quarter? up those low being up -- was you're talked comments mid-single the is in in about the about between had believe talking talked being the that two I same industrial first here. And there business the differentiation rates? prepared to You digits. commercial you X% as Is

Rob Kuhns

Yes.

is this Rob. Keith, So

into little on the a that strong mid-single it low that when on exceeded guidance. We correct obviously about to overall that's what's industrial was talk bit. the install being both up X.X% digits, you're specialty the the business distribution commercial front, Company business. baked which yes, up for in first on quarter, our So the we and

I the year diversified that end markets, the and So a side our strength been think this show industrial business going and we've about we what the to commercial with really to really of talking diversified model of can where growing. testament a is it be

first for really we're low optimistic growth mid-single-digit but year, had the with quarter. back we're to that obviously great half, still for the So but sticking a

two commercial two wasn't far the in quarter outlook. say, segregating As between between meaningful the or in industrial, our as difference the and a there I'd

Keith Hughes

Okay. The that include One are other referring how roughly much? And question on you to, so, that. does if numbers pricing?

Rob Kuhns

Yes, on price, things. through that. Definitely, we fiber of don't but glass the have more don't between the it price But commercial. the residential given split of there's on includes break down that side, residential we flowing side price and higher content

Operator

comes with Phil Our from next Jefferies. question Ng

Phil Ng

bigger Congrats maybe what and you unpack onshoring, projects lot But on little XXXX another of some one problem the to was you stronger the Can some petchem, there. kind part concerns terms have I would ability would of versus Robert, strong activity. the letting I small, in imagine conditions. guys out segment color Sorry, that up impact bigger versus help and your kind looking really wouldn't the have but the these good all around smaller much to other? you're labor if of much beyond, quarter. of bidding this you projects, some your a stuff getting stuff. Certainly, bigger size there's curious customers highlighted tighter appreciate move to that big of around of a capital, some of year. wouldn't earlier about seeing on imagine

Robert Buck

Thanks, Phil.

in around about to, relative things if piece. and go the type of build future, think I those and think beverage. projects about playing right think that the you're large the you funded first, required happen the I has is of let refineries in and certain you we me country. to on projects, you some if ability of things if even A actually our do see the in future that But the parts the food some of So MRO and about the those to recurring are fluctuations mean, that move to well of MRO well side, that are spoke if lot

that's that MRO positive So part of business. of the

new you out of projects, where projects, the of large then comes think And work to if those those our and those most already projects ground. to relative one even reason 'XX that's projects, use are about into -- projects run 'XX relative those of we go they'll well because and term and funded projects. that those long-running are rate to to the Those

So we seen impact. the haven't

I you overall, that of really think given of beverage really, if think, from about the business oversaturated onshoring natural in mix And good. think feel to not one multiple commercial across we food there the even area the industrial the segments gas, industrial, we within and think space, have gamut and you avenues, I EV, the the could and we're where we think semiconductor we're there. liquid kind

acquire coming. So -- really a that's and lot of infrastructure those

feel we customers. thus about of obviously, also good bigger no our signs So here else but it. it signs it is, We'll in with like talking constantly, no far. watch everyone And

Phil Ng

going That's from that, the tax for great I or And average year potentially to kind expand some any those and And expect you even Can it's benefits? uplift standpoint, the on whether Act believe do XXXX? homeowner an color, this Robert. IRA builders. credits you from of then there's

Robert Buck

think think -- the Yes. about they're I I mean homeowners.

business So And distribution on that specialty potentially contractor we'll our maybe primary customer think side. the efficiency look some reinsulate, our if some as definitely there. or you the drive of rebate energy some get efficiency from an after our work, distribution on to people you Definitely, about work the that that's energy specialty be doing to will, rebates, side, residential. and get that -- of smaller may if especially doing that -- our

those about us will If that across of those example, nice side, expect hard the space. play, industrial. commercial bills come an again, of industrial both to and infrastructure the benefit that see to I some definitely City of mentioned from Airport other entire kind piece, as on Lake again, Salt play infrastructure that quantify given, commercial projects, tailwind the some types into think But some Definitely, we'd we as you that.

Phil Ng

avenues. in some Okay, of to great to these of kind super. job portfolio the growth And retooling happen to

Robert Buck

Yes. Thank Phil. you,

Operator

next question Stephen Kim Evercore Our ISI. with from comes

Stephen Kim

Appreciate all guidance. quarter. help and Congrats the the the on

beginning. You the made interesting an comment near

about that XQ you overall sales, you in think your you in said when overall with were I the think what residential, I you said came well or XQ roughly talking your line market expected. the And -- but side and and planning the environment clearly, for exceeded of pretty expectations. business, residential by in XQ so greatly is the industry's sales the forth XQ therefore, homebuilders

may activity So I just time credit open their to saw share the stress. too, to is difficult And to want we're see more one well. hear I to as may of you because think a little of the a the that of have market more to of see balance confirm you you you little that might that of larger things bank kind lines shifting bit spec the that as able and spec builders a you that, that, increasing they building, anticipating and versus sheets that which the that given follow-on be bit small do have privates regional mentioned the

year? it lead to the I assume a shift this later if lower the you guess of share that So residential side this to install -- incremental or wondering, I'm is business margin in market see slightly that might reasonable

Robert Buck

Yes.

well. as start I'll and this will I'm hit Stephen, that So on try add it. some Robert to comments sure is off, on Rob

ground. piece mean, what saying to production and on are obviously right. and the support seeing and think it. ahead the that, for we're curve think share I come builders the piece get seeing They'll absolutely out of what you're having things coming, I some of around your think the exactly Yes, sheet that balance here of large I gain builder right as the us spec about So stabilize I you're that. home allow

given builders, perspective share material the shift happens production those happens with too that situation, or builders. that I situation, if not from a shift think our the we're labor production with concerned relationships the margin

QX over he's add-ons. I'll concern that hand Back any your comment, no to then to and if perspective. Rob from So got

pretty family. I think say happened whenever line, It single we flat. saw we in was what to

Multifamily volumes, we some distribution inventories was done up commercial lowered given they on down a distribution little in the thought industrial were came what the out we what strong, our some in healthy about of teams exactly the expected, we is play talked the residential in field really have smaller in we and really, we multi-family, bit what about given side then by did. thought the well and contractors would the shift as as dynamics quarter, as talked those expected,

Rob Kuhns

mean, slightly. a team mentioned getting job a work. we out about where I'd multifamily Yes. Yes, great in down better a lot installed prepared just talking I a did comment, volume perspective. we're we on right, I'd add, think that we when of The from made like remarks, say in we're total, side expected. Stephen, on the I side the little getting And there, residential volume the distribution specialty

saw had in people the residential less distribution shift inventory well especially taking the smaller contractors quarter. that a as bit multifamily slowdown as those products, the with mix, anticipating We go of out, little in share for some

in with line our quarter. two So right said, like are the expectations the for overall, those I But things.

Stephen Kim

your on sort side within of could follow there spec distro. on I If that, comments up residential the

in small -- what if I think, would you within in how said rightsized well, wrong, also a we the Or and maybe your high? you it. What homes, is business Could could think that that's right -- it multi-fam X%, first guess given side said maybe could that estimation the those little you mix about maybe was wondering residential the if all, about a why And spec of you, negatively? correct you distribution is I of are be it that then the your impacted level was other I'm multifamily down smaller sales? small that the then to be versus from bit reducing great. commercial basically too resi low multifamily now? impacted small about and affects due the installers talk sales than -- and inventory. But single-fam installation seen too mix particularly whatnot, being industrial me, your customers, I XQ think, to, inventories for would weaker that be attributed we've here the

Robert Buck

Robert. Yes. is Stephen, this

So around I'll execution about the fabulous. get special of by side talking you Relative here. that the try was single given the digits, answered business if all way, we the the field in -- stuff, distribution, on think which, to to the yes, those low industry look residential

handled So the great from that some how a think that, accessory products, results team on we team areas, the in other job the so multifamily of other side. did fabulous the products, shift

contractors, distribution after smaller builder, the get work. side, the type that residential more and they're that builder, which custom on probably work. They're smaller regional the in multifamily participating we repair/remodel maybe yes, the less So specialty

that that's going after. smaller of kind So what specific are we contractor

If the able about install about amount about of multifamily, -- and speak material, react of multifamily well when needed, week's the time material also that we're moving got that's and to to think on labor we it's move the up obviously major of -- I So that, picked there you something share fluctuations as needed why in plays that. on equipment, harder side, the you in side. if kind we the to around like where amount for multifamily. right? the think you a But us talk That or to frame labor

first with has sure of and as got commercial it. multifamily it also there's for lot the multifamily is above retail I'm light it but has work a you And today then work then a -- the you've where up, could seen, coming this be lot that of

have to if like the up commercial multifamily, And how of will. we that fact nice multiple some so it's playing and to allowed with us out projects across projects, pick you due we're ability

Operator

with Carl question next BTIG. comes Reichardt Our from

Carl Reichardt

about recurring think revenue TAM that What the overall MRO for you do percentage the talked $XX.X is you billion. being Robert, business the of side?

Robert Buck

Yes.

MRO about, seen I'd think opportunity, addressable $X.X we to total We at as if around So say, industrial industrial market. that the we stuff, business what you've that say type commercial billion billion $X on side. and look our published about call you probably the space. is call XX% of I'd it,

probably that done getting good really and fabrication And getting after we've -- capabilities a work. our of so job

less XX% little total than is of say TAM. that the I'd a So maybe it

towards how I just tried exact is think that fabrication, to number. space. in it and capabilities probably how opportunity given and -- get I we in kind make gain our share we're oriented that sure and know we've to taking that, after of the

Carl Reichardt

be Okay. capital then sales recognize your talked think percentage probably about drivers target 'XX, where And of there's ultimately look key there? number to as And would do you What then, go? that going working beyond the I seasonality as in number to you a down? target? down XX%. can you XX% the get What that Rob, some to are

Rob Kuhns

say would in I long-term range. to XX% our is still XX% Yes. that target

now lies bit think a but little on I AR right the inventory the side. opportunity on the side, also

of definitely back So in slowing and out of the there's free squeeze the half year, capital working that opportunity some generate with strong down potentially flow. things here an to cash

with the for of full the there, the first cash free free $XXX great should of One XXX% million $XXX flow. we of the of of generated and cash be for our We was out flow. year, flow, we numbers year stories north quarter million free have our cash up

about we the be that XX% out year, probably but really will towards high that. XX% think as of term, that, So and to end we long this closer middle to close of we feel good the

Operator

Buck, back no CEO, the Robert are I like further would this President time. comments. closing questions to for There to at turn over and floor

Robert Buck

us for August. joining morning. to look forward We this early QX you in reporting results Thank

Operator

This concludes today's teleconference.

at this your You time. may Thank disconnect you participation. your for lines

TopBuild (BLD) 4 May 232023 Q1 Earnings call transcript