BLD - Earnings call transcript Q4 2024

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Operator

Ladies and gentlemen, greetings, and welcome to the TopBuild's Fourth Quarter and Year-End 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, P.I. Aquino. Please go ahead.

P.I. Aquino

you us. thank and morning, for joining Good With Chief our Executive are Robert Chief President and Buck, our Officer; Officer. me today Financial and Rob Kuhns,

We statements at topbuild.com. remarks no of those our unknown management's release filings. summarizes or uncertainties, release including will comments subject Many information, posted include to set today presentation to and forward-looking assumes our and website The the and a this new are that formal press our on forth remarks our earnings forward-looking which and risks senior morning's otherwise. any SEC in company's company of statements obligation update in known because events future

prepared a some measures substitute measures the results to financial provided non-GAAP that be reconciliation during available which are release are measures of to website. not with financial note intended press both today's this of in and of a these comparable in We've basis. in on be accordance the measures as non-GAAP isolation or presentation, to These discussed our Please in on considered most a for be the call GAAP. will GAAP

to Robert over and call turn Buck. like to President our now I'd the CEO,

Robert Buck

Since are share XX-year anniversary opportunity joining as for today. and Good thank spin the as for our business strength model celebrate of expansion XXXX, our morning, year. of we in demonstrated consecutive and the long-term you growth a that our year company We proud at ninth us we represents TopBuild our to XXXX and TopBuild. this have profit public

and every to our for start to safely service a business. team been employees and diligently drive Specialty excellence commitment center customers, working by dedication day. as for Installation Distribution as and to operational our thanking to well branch our teams have want our I work Congratulations their and results truly support Our effort,

been remained rates for X than said, the underlying the XXXX elevated builders to the few bullish increased residential opportunity. forecast long-term we construction quarter was starts are in and continue like months. although have much some be Interest fourth last mid- housing new trimmed quarters. anticipated. The about And the housing fundamentals have prior and the noted strong, market for external landscape in That traffic, being longer

exist uncertainties environment. in today's Many

So steps results, me impact. do before a we our significant we topics. tariffs, not relatively this impact portion of move I and on anticipate a on to a to mitigate Products business. let our material cover our impacted spend, taking appropriate On represent small are potentially few

markets putting deportations we labor, are at TopBuild. which aware Regarding potential in happening impacted This premium. labor construction slow to the cycle, of certain the a have has not

labor are cost this our confident in in and are we being of force structure the We as labor strategic manage strength and environment. cautious our

We and as conditions will continue economic evaluate closely regulatory our impact and watch to industry.

Turning now to our results.

business double in expected as multi-family the grew quarter. Our Single-family while residential digits. performed slightly declined

Our commercial saw full the and industrial the quarter year. and in growth for business

fourth in some We to delayed projects started see the forward also move quarter.

bidding the backlog TopBuild's built fueled to to billion, Fourth front. be sales growth. $X.X Distribution on have Specialty very a strong X% continue active grew We and quarter by

details Our margin XX Rob EBITDA in adjusted moment. improved $XXX basis adjusted X.X% and XX.X% provide points million grew EBITDA of will to year-over-year. a more and results

facility housing the capacity. Turning building to has plan The in and demand has still has loosened as is to our production, Fiberglass operations. Knauf started softened. Texas supply new optimal

optimize strategic across on environment diligently previous and of to is our last improving. maintenance team planned uncertainty be the relative in pricing model times Like working seasoned dependent demand expected to decisions future operations to demand, will While year, less making than be our footprint. this is

the proactive control insights We and environment. current teams be our allows outperform to business in that and field to our of great navigating have changes

$XXX allocation. to Installation both a annual top and of to continue Distribution Specialty our approximately Acquisitions Last for in Turning we total X year, capital across acquisitions million priority. be revenue. completed

In XXXX, through we returned nearly repurchase program. our to billion $X shareholders share

the in to up $X new program long-term a Board of today, authorized confidence business you buyback strategy. share release our As Directors billion, our in saw of and demonstrating

Our active M&A this very be healthy. a pipeline solid year. to we're The continues to off is environment and start

core that to last focus I quarter, could about addressable time, opportunities expand As insulation. At noted our we of learning continue on same the total our market.

and be our strengths. to opportunities will us approach we in As enable core to always, seek leverage disciplined our

and take Let and core talk me a minute we strengths competencies. our define how about

people business. are we First, a

are who employees XX,XXX success. nearly central our to have We

talent competence direct and core a business. have of throughout retaining recruiting developing We the labor and

have network the dispersed Canada. U.S. over a branches across and with We XXX

is happen in drive local philosophy to business empowerment. strong Our are be field level, to rooted The performance. decisions our so day-to-day the owner at and operational local leadership encouraged operating excellence the

model. have We ERP to a single operating our entire a system is key of use continuous a the dispersed great a branch Technology confident contributor and business success. improvement footprint record driving and track of our across are

the analyze measure provide productivity, improvement initiatives drive investments best business leads, practices and consolidate real-time support center. technology facilitate at new across back-office branch information, Our to business us our certain ability give functions the network,

of customer industry, and our with the category the operate Our as has partnership in and we buyer supplier insulation dynamics in suppliers. unique largest

value exceptional For and drive teams our our customers, service.

thoughtful are committed we our and being financially to disciplined in strategy. Finally,

Our balance is sheet healthy.

and track shareholder We have a great strong returns. a M&A of history delivering record

External interest to by broad then the of and through turn thoughts is guidance. to you it is down Persistent industry. on in with high decline starts come past Rob details the XXXX, our close results and over giving some take uncertainty most predicting a for have regulatory ongoing you keeping I'll in rates in year inflation the this few construction housing for starts months, and XXXX. forecast creating economic challenges

improve, the unclear. however, to demand residential is timing expect We yet

activity be are this industrial and Installation seeing delayed as Bidding in some commercial continues Specialty year's and we launched. are to as an the both last Distribution, On front, uptick space of projects strong.

our business model fundamentals and the being and underlying industry the optimistic organic on outperform market an our to of advantage. and see about ability opportunities, We continue We capitalize inorganic. diversification growth to both be of our the

Finally, our our acquisition to the given guidance anticipating be we on pipeline, not another contemplate XXXX are M&A. front. active And year does

Rob?

Robert Kuhns

Robert. Thanks,

Let hard and by to results customers. adjusted and delivering thank service and great saying have their focus exceptional XX% compounded EBITDA X.X% sales growth on XX.X%. job teams another rate driven do efforts, operational of enabled have been me for to start a work a These that our and value from to X years which our by we deliver excellence margins us grown for expanded have to our annual relentless spin Since employees you our at a year TopBuild. record ago,

quarter, Today increased X.X%. on billion. and XXXX. sales $X.X walk through volume contributed X% to then the pricing our by call, I'll review declined our for the X.X%, added and QX fourth guidance In M&A results, X.X% we I'll

$XXX.X sales on by Turning to decline and were The multifamily offset year-over-year at million. the slowdown of activity. pricing flat M&A of by relatively Volume same basis. our a Single-family and was X.X%. segments. X.X% to flat prior year was Installation activity was choppy driven in volume branch declined X.X% and remained

quarter. sales of quarter. increases. in to Within Acquisitions Specialty X.X% Volume grew ahead pricing X.X% commercial added while rose cost foam grew $XXX.X spray Distribution, industrial the by in rose as fourth industry the million was X.X% sales sales and flat

which year. business gross quarter by was totaled demand, challenges lower products, economic margin of $XXX as installation in last points in driven margins continues year primarily strategic price well decline basis than was prior as decisions uncertainty. The Distribution were XX.X%, certain and by our million conscious tackle or decisions Gross distribution residential on around markets. residential housing in as lower affordability driven and both volume soft and XX labor profit primarily industry adjusted Specialty Installation Fourth than the to

environment. supplier tools working our price partners and to our we strategically changing volume balance footprint, and with local Across are in closely this are leveraging decisions, we technology and our

Adjusted of the quarter basis in a $XXX or Installation prior basis EBITDA XX TopBuild's the versus XX.X%. Specialty improved sales quarter fourth to than year. year. points a margin points was was lower of basis for XX SG&A EBITDA to improvement flat totaled as in Adjusted million year. quarter, percentage Distribution XX.X%, adjusted XX.X% last segment XX margin the margin in EBITDA point XX.X%, last a fourth

Fourth per diluted earnings was to higher income million $X.X last $X.XX interest year expense quarter than of Fourth and income reduced due X.X% million adjusted other balances. share of versus $XX.X on quarter year. improved lower cash last

and and of we flow. Moving have We balance the million, million Total to Cash ended cash the of XXXX. end to liquidity quarter of quarter. of XX%, at $XXX.X our our debt $XXX.X adjusted EBITDA. percentage the of was debt revolver. net XX million under availability XX-month X.XXx ratio our trailing sheet $XXX.X was leverage net and a capital improvement an as points Working basis was compared sales million, with was $XXX.X

in million In cash XXXX, $XXX.X free flow. we generated

spent million on acquisitions XXXX, Our to million capital unchanged remain acquisitions $XXX.X buying priorities capital $XXX.X shares. We year, back remaining also shareholders in and about in returned allocation top we million X.X last with our priority.

which As under Board authorized a to total new our has authorization of $X our Directors repurchase the share you saw brings in release, $X.X billion program, available billion.

includes M&A. but outlook. we that potential our have does want M&A future Turning to you that I include to closed, guidance remind not our any

$X.XX million EBITDA XXXX of billion. to to for $XXX sales adjusted is $X.XXX guidance and of billion Our $X.XX billion

significant uncertainty head into markets. to we As continues be XXXX, there in residential

environment of we fundamentals long-term bullish demand, around uncertainty for do given baking lead choppiness. to residential uncertainty remain the current housing, We guidance. we but we will point into are While not an that the the our anticipate anticipate around in residential inflection continued timing,

will down midpoint XX% following: sales, single which will digits. The our $X.X XX%. approximately the assumes XXXX be revenue volume makes at be of our of down guidance up billion Multifamily, low

which makes as low of industrial, and to will from Commercial continue a flat XXXX. in sales, XX% single family, sales, of mix we be XX% multifamily multifamily a benefited of impact will delayed saw in quarter digits. up year. in the starts. significant fourth be will we our be the Single As which slightly Price into the reminder, up to backlog, the up slowdown down pressures which expect prior the makes of XXXX our carryover

M&A. little is year. Our a be basis color basis of down digits single revenue you will sales, X decline QX EBITDA more an the will half recovery, down have XX.X% volume, the prior on sales strategically being point revenue the of or higher the than main potential decline XXX our This labor housing and strong in guidance across XXX roughly by which office quarters give given driven The our the continued low target. all to year and in the billion is uncertain of be competition drivers $X driven lower EBITDA by down efforts the forward the moving will for with EBITDA back decremental manage support guidance of To long-term points midpoint margin of appetite first, the slightly timing of margin, for our most. mid-XXs, labor assumes

be anticipate decisions of QX we continue volume to the margin Second, and half choppy certain other residential similar will due pressure gross to markets. to decline price balance as the we in

fixed productivity and to both analytics. which such the comes in offset investments and initiatives e-commerce M&A carryover, of impact digital We data year incremental in expect X with as costs

the the quarter's consider fall each expect profitability cadence of QX is guidance to XX.X% bottom you quarterly As of throughout full and to EBITDA near end be to we year, expected within the range year weakest of our margin XX.X%. range. the the

million. other Interest expense from between be a modeling perspective on our Finally, $XX million guidance. data $XX will a points and few

XX%. rate the CapEx to to working tax and to be will capital range XX% XX% in of income XX% X% be we of of be sales. Our expect will and between sales, X.X%

expressing for Before opportunities by business close I back let confidence over, our and future my me the it of our health growth. in turn

extremely to While TopBuild macro uncertainty, we continue outperform are in facing currently some will environment. any I'm confident that

Robert?

Robert Buck

critical about have Let construction TopBuild's me our saying new great strong, operate call and a for future. we proven do business strong fundamentals and we fundamentals, model. Not play also The bullish category our that by and only underlying a to close unique continue products role. with we in services industry a are be today our and

will market fluctuations demand even changes. the as navigate We broader that are in confident the and environment outperform TopBuild near-term

Our business these on inherently is growth, positioned both opportunities for organically well and acquisitions. capitalize to through

We remain on healthy. Our record track delivering is acquisition increased shareholder building our to of value. committed pipeline

for up With let's the open line questions. operator, that,

Operator

first Phil The from Ng Jefferies. question [Operator with Instructions] comes

Philip Ng

And balancing side of color Strong the side on I builders you it's Rob, the pricing the inflation, here insulation. seeing of environment. help mentioned, of and you just just for margin quarter. getting some appreciate Or all guess kind kind given of are foam same? do think that of seeing on on pricing a that? are I And kind you the under certain pockets, dialogue I more from what to the things. how little are But And inflation, some ability Certainly, of the pressure? on mechanical of that you're think, things, we your us through of of spray not see cost there's through maybe one. if kind pass input squeezed kind thing pricing

Robert Buck

Phil, it's Robert.

I'll perspective. industrial relative very that builder's kind the say you right if some definite spray side of do you definitely the builders in pressures affordability products, distribution share, side. pressure the mind perspective, Commercial those the from builders. some it's in a So but see right? on set with the chasing from is get a at the not slower is working to into we Yes, markets. some of look would we're drop mean, doing been and on top there's definitely definitely So start on the fiberglass if that. that, of see markets, of of the with slower we're more business of from obviously, of you pressures. now, I the heavier And And well kind mean in by foam side I markets

at doing are developed. being teams outlook here you appropriately, mean, if job. our cautious XXXX But our a looked I great given that how and we're in

want So focus in have because not we of we've make any our we realistic optimism sure see today. baked we what a to

Philip Ng

are dumping squeezed I duties. kind you of that on with an Are on I'm business Robert, uptick in mentioned starting foam on some And to think backdrop higher? because China? see that the And there's from customers Or it. surprised saw little you of that distribution you buying spray the comment ahead getting you spread a move

Robert Buck

Yes.

material available. definitely So a lot out there's of there

But that some announced work continues definitely get the pressure -- around there's first the right in here ending was in of along. the there's so in as passing -- been some that in Thanksgiving And first around year that quarter. to

relative of And market comes it here, around be it so the there so that we to as as expect much the of fueling some seeing some as as housing not of has some can that obviously slowed, demand you're demand, well.

Philip Ng

of more seeing side? kind markets. opportunity C&I an Robert, from you that on terms is that looking adjacent of on give years? going color administration M&A a the there, a think bite markets. kind what kind bolt-ons? us I especially of pipeline perspective Is Just in Okay. more you this hinted Or And envision seen isn't then be standpoint, here. time new we've robust, pretty you're you hinted bigger a at certainly C&I more what to of the this out like Give recent in then us the first little And adjacent the little

Robert Buck

Yes.

as as X commercial current industrial So we've the all say then will, well. I'd -- residential we about distribution across think prospects it's some in pipeline, there, if you great segments and got

which we big that some definitely space mentioned, Global, did think if was in acquisitions closed Phil, at I the and of that think which XXXX, Metro half. Supply Shannon As you it back our about you C&I look we with we in specifically,

lot there's in of So activity space. a that

expand, installation job our areas. that. But C&I we think some and down I the can saying, the great of look, the as about spaces. of here that the that industrial, those fairway. as we check at a of gives those being in think value we level strengths we Residential, a think more high have how done us of core we're adjacent the And part set core shareholders, There's We've opportunity is drive company, that. for to we also we right boxes confidence as C&I in with of commercial, look a part adjacencies, we're competencies, communicating can

growth generate cash that, but we company, that opportunity of can and as forward. the So going tone I'd think had about given use for thinking here, a the here we allocation the good and probably hear we've think say I more that some in to on about thinking for company come that And our you TopBuild. we're capital see I good

Philip Ng

And those are be going the be tuck-in opportunities Robert, more to potentially would larger? Or there on adjacent side?

Robert Buck

potential I for think larger out there TopBuild. some opportunity there's

Operator

The Stephen ISI. comes next Evercore question with from Kim

Stephen Kim

the all If see color you here. said guidance delve opening wanted and in a could if the into appreciate little something to -- bit I that you -- the I put it of remarks. on your

conscious And meant in volume a little primarily decisions in and be labor you I decisions that? think about bit by and could strategic certain you around should you're those looking distribution in on wondering talked what into points? as expecting XXXX I products, installed on you elaborate what price was markets. if we residential

Robert Kuhns

Yes. Steve, this is Rob.

little walking in that So terms seeing through you just of we're there. bit a what

side, bit Robert in on a talked created side the pricing bit about we some of talked of seeing on supply We're QX. As this price pressure. that's little little things, the a spray foam extra

to we the need need making to, we decisions with to drive continue volume We're where product. that some to. So

some So pressure quarter for that created sure. in the

some like slowed that being right? saw of our point. residential we're pressure on long the bounce on those then working say positive the that that in definitely still markets the that's even, and is we certain the working cost on We're get or still term for or -- at things. we're we the supplier volumes where seeing -- we're I'd we're side through midterm in I'm from labor about on with more But have there. but things, some being obviously the sure, the back the our markets in And we're pressure optimistic there side, installation as price/cost side, install strategic distribution quarter, price on partners side, the here And thinking sorry, will

cut being to we labor there, being out we labor We're active on be office good not careful have M&A being that to We're continue our that well. as the with back careful to want front.

deleveraging of there So driver seeing volume the that's we're side. the really on the

Stephen Kim

helpful. understand, That's I yes.

Okay. worse then heard about just other Robert, I I that builder what conditions if you I depend -- talk improve, stay be Great. was I'm not just market that fiberglass fiberglass to And indicated it similarly, expectation Would it they of sort they sure of words, pricing don't upon the price as I want things correctly. think are. are where here, paraphrasing that get your -- when stay way are you you in but they and if they improving. don't thought that would just -- they make they stay sort increase I see you either, things think this year? you increases, would

Robert Buck

would I'd demand increases definitely -- say there now really. for you And traction slower Stephen, as I so Yes. available was Those announced there's in right know, see environment. earlier say, material the given there's didn't January.

have demand in to be an there And I driven environment price by XXXX. to it going cost to think so drive is increased

Stephen Kim

Yes.

side Can actually in elaborate mean more Okay. had your And does with the I a think lastly, from you are remarks well. you is your significantly volume than think, more on using then a of and had in one doing past you technology about than in And pricing you technology bit your operations? I aid, little What perspective? that? to that prepared Like mentioned what your the and other? business something decisions it just practical as

Robert Buck

Rob that, as with I'll Stephen. in chime will start sure Yes, I'm well.

our than by by And that labor gives really drive -- put think insight productivity we're other as So management from on able where make allows control that appropriate ERP install to tool us valuable our extremely market, versus that, to guardrails it One, productivity fluctuations about around is we perspective, empowerment that, distribution to locally. even perspective, see from gives these say than perspective, to business, sales pricing give say able times to more able resources. demand of I'd perspective, in to we're any of to I then decisions. us wouldn't a we're usual so great field teams decisions which

Robert Kuhns

on us Yes. the we And great planning are slowing to those get labor that orders the I'd visibility is into add us start common Allows about things to other Stephen, volume side. the some an ERP Likewise, of where from gives pressure out reductions. thing perspective. talked only ahead, just

our using ERP common as we're So well. way that

Operator

comes The from next Goldman Susan with Sachs. Maklari question

Susan Maklari

talk to a bit the I wanted side. about commercial

perhaps that about there. despite you bidding You activity remarks mentioned is the some work coming we where are that healthy bit thinking bit get higher? your from? actual about starting of out to what macro flow need of in more activity activity you is to to And a talk you're to how seeing that that that a see still Can and that bidding levels through relative

Robert Buck

Yes, this Robert. is

in side very we quarter bidding by was definitely industrial results. field, the activity and for the teams our commercial as job saw in full is a there. that nice So year active saw We well and it

for So Rob that in as here business about you commercial in industrial growth we're heard XXXX. guidance, we're his -- in talk the looking of definitely side

If pretty the you think thing main the gas, of and if verticals across we're commercial say those you see and about business, that. bidding we food types centers, I'd there, industrial -- look business, look, data manufacturing, most beverage, We're we you like oil verifies obviously, what of the areas. across as pharmaceutical, think optimistic I that verticals

there. diversification And the like we

plant, people pretty across ask, areas, those Battery verticals weakness. see diversified facilities, stuff. sometimes you any in and where And been EV those but do some we're there's

here So were we're most launched delayed forward, back, then we we projects seeing looking what like that as seeing importantly, looking XXXX some get but we're mentioned bidding, in and well.

Susan Maklari

help perhaps you that maybe go several as to around the helpful quarters? bit appreciating leverage the how we through have as color. how year the company-specific those talk next looking But anything this side for you of those? can other locations there. on that about margin And about efforts some That's some you and actions the you're those in of some can consolidating environment some the those we're given the And and could coming of turning there, of Okay. to that other that come through, distribution and labor commentary the think actions then a and you margins, the in through

Robert Kuhns

so Rob. is Yes, this -- that Susan,

So that's for an obviously opportunity something that's us. out there, definitely

across look the we're well midpoint mentioned opportunities. productivity initiatives about, looking have as got So Like the as some challenges we're the digital that's we're on we've ahead, some of around that looking number a baked some labor well. guidance, opportunities. on as some looking offsetting investments as footprint of at I at into the and of at side our And I call, your with we the talked as definitely on like consolidation e-commerce carryover making you data M&A margins of things some analytics and the things decremental impact of we're EBITDA

do in something of of have on And we're environment now. in we that we're productivity baked right in. the top But it's terms that

Operator

The Securities. line Hughes next Truist Keith comes with of question from the

Keith Hughes

on outlook feel in within this Your than guidance installation? what that coming the is be mean flattish. would industrial would see commercial framework, less that we Would distribution business pressure

Robert Kuhns

is Rob. this Keith, Yes,

on growth single-digit commercial side. low to guiding we're the actually, So

XX% to to do that side point, on piece side. be makes our that on Obviously, the of business, much installation up So -- bigger business like expect more that things. we your versus we on up the side of of XX% distribution a

So you're correct.

the than be As a it from install year, segment year-over-year for sales the be tougher growth distribution. will we at perspective, for look will

Keith Hughes

near for term with We've lack of are that's and price deflation What's jobs all pricing fiberglass? your some, about I view of increases. heard foam the kind talked some spray primarily guess, you've going of about that And on.

Robert Buck

Yes.

traction we the as now. a of there earlier, perspective, lot given excess was material mentioned fiberglass So right

to teams right able So There's obviously, out announced new no give guidance we're now. there. our increases

not from just making sure perspective. And teams share job any maintaining. good so our a we're chasing do that We're of

next, sure days they're residential call here guidance to consistently getting on the bidding XX side. we're for So it, the make

Keith Hughes

you environment? Do bad this enough job prices for in be think compression in that? there'll Is it

Robert Kuhns

it Robert certain -- the we spray see pressure there the there's have more markets lot average. markets, side foam we we still of things, A but are than about kind on performing talked there's And things. the markets, the of that's But in like right? that fiberglass do side some certainly pressure, of them choppy, well. why being mentioned on that, In of slower

widespread thing not it's certainly So a point. this at

Robert Buck

from optimizing are you you've us us, in choppier some And making great that these for while watched some or I margin uncertain, those Keith, a Rob of that think that say, what of I a would -- they're just our of teams decisions. is spoke see good job volume markets do perspective. to a

And of so that. you And look margins up job you year. the overall, good if that a think we the very nicely I giving are full see, do guide the for holding we're at

Operator

Rafe America. The comes question from Jadrosich line of with the of next Bank

Rafe Jadrosich

it's First, I the appreciate that But a pretty on environment. that you guidance. choppy have it's a wide range

help the that can understand some versus Just us you starts of you the end to the assumptions low the high outlook? particularly end of get guidance range, on the single-family

Robert Kuhns

Rob. is this Rafe, Yes,

on do uncertainty we little -- low right? then focus probably And our mean normal, the and plus we end, that's this. closer of midpoint when we about it. kind X% perspective, as end, of on put X, wider And range on think a we midpoint given is there. flattish say I the high as you on point a the single-family year-over-year minus a like than I'd basis our -- So more to from a we out

high So that's that the single the XX% digits commercial low. better down on we've multifamily little there. a below industrial, kind the low that at on and then at got of the on midpoint, then range little range And And a similar we've similarly, talking about. than a the we're got similarly, around

Rafe Jadrosich

you Are first the just sounds the expect there to quarter relatively the I you after Or are quarter? you're there the assuming facing first subside? that like on first impacting better what's we macro then know -- first to headwinds quarter? you like about are balanced be going talk the that specific And gets it's but weaker. it quarter, through year, the Can

Robert Kuhns

say, the I I'd first do benefit here the that have in mean No, we've quarter, seen. we -- Yes. the we've of X.X books months got

we now. seeing right we're know So what

like year, that as that baked about obviously in. back said, the the come But an to we've guidance. haven't so of is baked that we've upturn stronger. demand in And And our residential for we think we got we're optimistic going balance into

kind about So seasonality think baked when in basically we're rest now, normal of you of we seeing what right the through year. the

are you kind where and to when look we're that, the right, you that see year-over-year if And be comps, at of single from low going you do we today you'll do year as have we weather as the definitely of year But in down most weather well. a some down digits QX January. the We every factor did most. with That's have well.

out. not So that we tend to call

Rafe Jadrosich

the view, it's comp macro basis? but a on is a just consistent year-over-year So different

Robert Kuhns

And it's in out, too, less QX. Yes. to important X have do we point day

less So day, for QX. X be the it's in the the and the rest year, days of will same. The year,

Robert Buck

Rafe, I is this think, Robert.

to outlook add happen there. way sitting the in in think at the to beginning was half here mean I XXXX, year everybody the of think with back year. of the for was I an back on I Just going what

that have back not And to the develop, in but in what based saw we're so half get point, 'XX see the where we today, we to situation being early optimism, didn't the it and everybody on 'XX. to was Rob's cautious wanting as outlook as

Operator

of line Zener Partners. The next Ken from the with comes Research Seaport question

Kenneth Zener

is that the just a they're know. Rob and narrative ask this high leverage level affordability, into builders' more some do inventory today, you operating do slowdown, has leaning is think of is is like the as it home I work And more high-level question that idea actually order an I'd the takes ask mean, since to question. Robert, long housing you you underbuilt in presale long Robert, units leverage quite buydown. complete But you it to that new the dated, but probably like and that have -- off best to industry mortgage because units -- there. How data inventory the of out under mentioned high construction, word the think you This how you in? been

Or versus to mean, is inventory? the to Or they excess assumptions, you demand building I trying going of understand that they're your do it kind bidding in are could we're the keep it this is -- that I'm see? seeing. down headwind up? just

Robert Buck

inventory, the into to that's of and I that's I the think Martin, where, think I folks back about so half where point, Ken, some think are the your year. leaning

how that see we'll develops. So

that could things I what think see We'll happens. if pick definitely be realistic. up,

right? I that. think downs population the on they're a depends you're buy of the in talking and the big builders for situation to about, builders builder they So the kind continue

I more think this goes the XXXX, some impact smaller the here. had smaller the more that on, the in regional probably we longer builders can it of

obviously but you build. product where well. got right, continue are inventory able inventory those ground. to they're are with affordability bigger issues so they're adjusting they're guys on of the also business the the builders to smart more as The based to see you're the sitting maybe -- So on market where going But the extra people, -- they and

approach their as adjusting well. they're So

Kenneth Zener

broadly? Rob, but you widespread markets not Do Right. And talked guess, new decline inventory those market much pressure? did you where Southwest I in these to the in with there's what about that and and weakness, house down particular weaker, Florida, seeing, margin is where incremental some other the not mid-XX% interpreted that areas price concessions your are Are meaning widespread, -- markets, margin hearing, with there is that be we're same overlap are pressure highlight margins factors. some going pressure pretty

Robert Kuhns

us the on or I think by yes, is as even it's of can general, creates But definitely hard well. But I'd Florida have of certainly, there. very state say, states, Texas. where it's different that right? that there's so what state correlation and inventory, generalize the builders, effect a more some pressure seeing more to even we're definitely, the market, there's for trickle-down market in within

Operator

The of D.A. Kurt next comes Davidson. Yinger the with question from line

Kurt Yinger

I'm labor. that kind the how on commentary of curious intuitive if question offering as nuance over activity in to you it little could might maybe it's the landscape specifically serve impact terms the more bit XXXX? kind premium that guys service we competitive advantages mean as that in see not deportation TopBuild regards the I look putting of on for of benefit there's one or to around you pretty out a and guys competitive a have. Just oriented

Robert Buck

Yes.

this Kurt, cycle. things X the -- is things cycle is some construction that about I'd impactful a us earlier things. right in and say more think after up maybe in we few it's As Robert. the of Number probably

be about there could time impact. cycle So we talked a

perspective. I think from that think about we it

our the confident about our the well. levels service we whether think very we're obviously, as be business obviously, commercial side we can that, think can in that as it I We think offer, in offer what workforce. builders, workforce, a value that contractors, puts the the our we builders, of install

time, the we'd sure be and able to for perspective. from we're So advantage have but builders labor we'll to how can't us, sure. control a the able be there that We we service for make to for it's think the cycle control

for advantage definitely So TopBuild.

Kurt Yinger

are an And follow-up. some a pressures as Okay. to and couple perhaps that kind of change you readjusting That decision -- I the temporary, impossible without kind a side labor demand kind all more view more of you the impact to little the just makes of holding about aggressive the maybe with bit think see things it's might and variables. are to knowing But question these of the your of on need answer what what mean some X at would be cost might that of looking size? to sense.

Robert Kuhns

Yes. this Yes, is so Rob.

with So we're our the with the We're monitoring talked footprint, the right? talking systems, with I talking about, across obviously bidding directly field, like mean, activity customers. we who's our

actions going in we're think I the what's of with get where this each more a for understand we before. always mean as we'll So feel going, kind get through on cost we've we're been taking. aggressive we market, -- it's

during been COVID it through We has off team immediately we it when saw before. after our Our sales through went XX% COVID. drop

knowing do structure, to players those your A slower right, right right? those B as similar we now. we and A as it's us, it's markets our is best B this to about players on and And hold our about And players players, cost long in a situation your and for C labor, given And your can.

Robert Buck

Yes.

to on to Just it. add

said Rob think it well. I

And back 'XX, prolonged example, and We is labor, stronger, actions 'XX if you but a weakness, good see took same but in our we was look here. whenever productive there COVID to the have came we keep. see the want and at choppiness to off also we appropriate even residential to back

Operator

As would hand Robert for to further Buck the over conference no now Instructions] to I closing comments. questions, there [Operator are like

Robert Buck

earnings. early look Thank our today. QX May you to we We forward for us Thank talking joining in when you. you with report

Operator

Thank you. This today's teleconference. concludes

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

TopBuild (BLD) 25 Feb 252024 Q4 Earnings call transcript