Greetings. Welcome to the TopBuild's fourth quarter and year-end 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I'll now turn the conference over to your host, Tabitha Zane. You may begin. Thank you and good morning. On the call today are Robert Buck, President and Chief Executive Officer, and Rob Kuhns, Chief Financial Officer. We have posted senior management's formal remarks and a PowerPoint presentation that summarizes our comments on our website at topbuild.com. Many of our remarks will include forward-looking statements, which are subject to known and unknown risks and uncertainties, including those set forth in this morning's press release, as well as in the company's filings with the SEC. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Please note that some of the financial measures to be discussed on this call will be on a non-GAAP basis. The non-GAAP measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. We have provided a reconciliation of these financial measures to the most comparable GAAP measures in a table included in today's press release and in our fourth quarter presentation, which can be found on our website. I will now turn the call over to Robert Buck. Good morning, and thank you for joining us today. As you can see from today's press release, we had an outstanding fourth quarter and a record 2022. Our diversified business model and seasoned management team once again delivered strong top-line and bottom-line growth. Our team successfully balanced expected cost increases with selling price adjustments and did an excellent job managing both material and labor constraints by efficiently moving resources across our network to meet the needs of our customers and grow our business. While Rob will discuss our financial results in detail, I'd like to give a brief overview of our operating results. Compared to fourth quarter 2021, revenue increased 18.9%. Our Adjusted Gross Margin expanded 160 basis points, and our Adjusted EBITDA margin increased 170 basis points. Both business segments reported double-digit revenue growth and EBITDA margin expansion. Installation had an outstanding fourth quarter, with volume growth of 12.4% and price increasing 8.2%. We are working through the single and multi-family backlog and believe we are getting more than our fair share of this work. Specialty Distribution volume did decline in the fourth quarter, in part due to the lumpiness of large-scale mechanical insulation projects, which we discussed on previous calls. Specialty Distribution's pricing was strong in the quarter, growing 11.5%. In addition to reporting a record quarter and year of financial growth and profitability, our team realized several other significant accomplishments in 2022. Specifically, we report our best year ever with regards to our safety and personal injury rate. Successfully integrated Distribution International into our Specialty Distribution segment and now expect to achieve the high end of our forecasted $35 million-$40 million of synergies. Continue to improve labor and sales productivity and drive overall operational improvements as part of our overall strategy to grow our business. Our technology tools have enhanced our installers' efficiency and improved the sales process. Our back-office technology initiatives have resulted in appreciable cost savings. We completed five strategic residential acquisitions that are expected to generate over $17 million of net annual revenue. Returned capital to our shareholders, acquiring 1.4 million shares for approximately $250 million. Enhanced our disclosures related to ESG, including publishing Scope 1 emissions data and added human capital management statistics, including more detailed workforce demographic data and enhanced safety performance information. We provided you with a better understanding of our long-term growth strategy and the depth and experience of our leadership team at our Investor Day last spring. All in all, a very productive and profitable year for TopBuild. We enter 2023 financially strong and well prepared to outperform in any environment. While we cannot predict the direction of the economy, our unique business model differentiates us from our peers and provides multiple avenues for growth. We also have several key competitive advantage that position us well for the future. First and foremost is our experienced and cycle-tested leadership team. They understand what it takes to execute our business plan successfully, and they're 100% focused on growing our company, driving improvements, and creating value for our shareholders. A second key advantage is having all of our branches rolled up to a single sophisticated ERP system. This allows us to track activity in every branch daily, enabling us to proactively address business changes through real-time data-driven decisions. A third is the command we have of our business, coupled with our strong track record of successfully navigating an inflationary environment, along with material and labor constraints. We expect fiberglass capacity to remain tight for most of this year. Not unexpectedly, the December industry cost increase has had good traction. Our builder customers recognize the supply and labor constraints our industry is operating under and the value, the quality, and service we provide. A fourth competitive advantage is our core competency around identifying, evaluating, and integrating acquisitions which continue to drive shareholder value. While we have market-leading scale, we see lots of white space for growth in all three of end markets we serve: residential building insulation, commercial building insulation, and mechanical insulation. Combined, they represent a $16 billion total addressable market, where we currently have just over 20% market share. In our residential end market, following the pandemic, we saw demand soar and builders forced to limit sales as they raced to obtain permits to start new homes while facing significant supply and labor constraints. With demand far exceeding supply made worse by years of under-building and material labor shortages, new and existing home prices rose significantly. This created affordability issues for many consumers, which has been further impacted by rising mortgage rates. Where are we today? There is still a strong backlog of single and multi-family homes that need to be insulated. This backlog provides us with visibility on the single-family market through the first half of the year and into late 2023, early 2024 for the multi-family market. While there's still uncertainty around the second half of the year, we are encouraged by the recent optimism from several builder customers. However, if housing starts continue to slow or remain at current levels, given our strong track record of execution, we still have opportunities to grow, both organically and through acquisitions. Moving to our commercial building insulation end market, we see multiple avenues for growth, including heavy and light installation and product distribution. As we noted on past calls, most of our residential installation branches also perform light commercial work. With the help of our proprietary lead generation application, which we highlighted at our May Investor Day, we are hitting these projects and prospects hard in all markets with solid resulting growth. As a reminder, light commercial follows residential expansion as new home communities require businesses to support them, including retail, restaurants, and healthcare facilities. For heavy commercial installation, we're looking at a solid backlog and strong bidding activity. We have roughly 20 branches focused on this business, and the projects in which we work run the gamut from distribution centers, warehouses, and hospitals to airports, arenas, and hotels, providing significant diversity and end market exposure. While we're the biggest player in the commercial building insulation space, we estimate we have approximately 11% share of this $5.5 billion end market. There's clearly significant incremental room for growth. Organically, our expansion will be driven through existing and new relationships with general contractors from market intelligence and the new project leads gained from our proprietary technology tools and from the hard work of our local teams bidding and winning more projects. Moving to the distribution of mechanical insulation in the commercial and industrial end markets, once again, we have a long runway for growth. While we're the biggest player in this space in both U.S. and Canada, we estimate our share of this $5 billion end market is only 10%. Half of our mechanical insulation revenue is derived from maintenance and repair work, and the other half from new projects, including both the types of heavy commercial projects I've discussed earlier and major industrial projects such as liquefied natural gas facilities, food and beverage plants, chemical refineries, and manufacturing plants. We believe we'll see another year of solid growth in our mechanical insulation business, both organically and through targeted acquisitions. As far as capital allocation, our strategy remains intact. Our number one priority after internal investments in technology, innovation, and equipment remains focused on acquiring high-quality residential and commercial installation contractors and Specialty Distribution companies. Our team has the experience and proven ability to realize meaningful synergies from these transactions, which drive by far the greatest returns for our shareholders. We have substantial liquidity and expect to continue to generate strong free cash flow, enabling us to target the right deals that meet our specific criteria. Since 2018, we've acquired and successfully integrated 24 companies, which are contributing over $1.6 billion of annual revenue. This includes SRI Holdings, a $62 million residential installation company we acquired in January. This well-managed, high-quality company brings with it a strong customer base in markets in the Southeast and Midwest, and its focus on its employees and safety fits well with TopBuild's culture. Looking ahead, our pipeline of prospects is strong. We remain focused on our core of insulation, and are targeting companies that will enhance our scale, expand our customer base, and generate strong returns for our shareholders. As I've mentioned, we have multiple avenues for growth, and you can expect us to remain active on the acquisition front. In addition, we will continue to evaluate returning cash to shareholders through share repurchases. Our share repurchase program reflects management's and our directors' confidence in the long-term potential of TopBuild, our strong cash flow position, and our firm commitment to optimizing the efficiency of our capital structure. Rob will now discuss our financial results and 2023 outlook. Thanks, Robert. Good morning, everyone. As Robert noted, our operational teams throughout the U.S. and Canada delivered another stellar performance, producing record results for both the fourth quarter and the full year. This is a direct result of our continued focus on driving top line growth and bottom line profitability, coupled with an emphasis on operational excellence at every level of the organization. Our track record points to the success of our operating model. Over the past four years, we have more than doubled our revenue, more than tripled our Adjusted EBITDA, and expanded our Adjusted EBITDA margins by 690 basis points. Moving to the financials, I'll start with an overview of the fourth quarter results, update you on our balance sheet, and provide our full year guidance for 2023. Fourth quarter net sales increased 18.9% to $1.3 billion and 14.2% on a same branch basis. Breaking that down, our installation segment's fourth quarter net sales were $761.3 million, an increase of 21.4%, driven by strong volume growth and higher selling prices. Specialty Distribution's net sales were $563.1 million, an increase of 15.9%, primarily driven by price and M&A. Specialty Distribution's volume declined in the fourth quarter as project-related volumes for mechanical insulation were lower than prior year. As I've noted on previous calls, volumes on the mechanical insulation side can be a little choppy due to the project nature of the business. For the full year, total sales increased 43.7% to $5 billion and 18.8% on a same branch basis. Installations revenue grew 24.9%, primarily driven by increased prices and volume. Specialty Distribution's full year revenue increased 77%, primarily driven by contributions from M&A and improved pricing. Our Adjusted Gross Margin for both the fourth quarter and the full year was 29.7%, which equates to a 160 basis point expansion in the fourth quarter and 130 basis points for the full year. This was driven by operational efficiencies, fixed cost leverage, and our continued success in managing inflation. Fourth quarter Adjusted EBITDA increased 30.4% to $237.4 million, and our Adjusted EBITDA margin was 18.8%, a 170 basis point improvement compared to 2021. Full year Adjusted EBITDA increased 55.2% to $940.6 million, and our Adjusted EBITDA margin was 18.8%, a 140 basis point improvement. On a same branch basis, our EBITDA margins improved by 210 basis points for the full year 2022. Our fourth quarter and full year same branch incremental EBITDA margins were both 30.8%. Fourth quarter Adjusted EBITDA margin for our installation segment was 20.8% and 16.7% for our Specialty Distribution segment, an improvement of 140 basis points and 170 basis points, respectively. For the full year, Adjusted EBITDA margin for installation expanded by 190 basis points to 20.6%. Specialty Distribution's full year Adjusted EBITDA margin expanded 90 basis points to 16.9%. Interest expense increased from $10.9 million to $16.8 million in the fourth quarter, and from $29.1 million to $56.7 million for the full year, primarily as a result of additional borrowings from our acquisition of DI in the fourth quarter of 2021 and higher variable interest rates. Our current debt is approximately 60% fixed and 40% variable, with no upcoming maturities until 2026. In the fourth quarter, adjustments to net income were $1.4 million and $7.8 million for the full year, primarily related to acquisition integration related costs. Fourth quarter adjusted earnings per diluted share were $4.40, a 41% increase from prior year. Full year adjusted earnings per diluted share were $17.11, a 57.7% increase. Moving to our balance sheet and cash flows. Our 2022 operating cash flow was $495.8 million, compared to $403 million in the prior year. This was driven by our 71.6% increase in net income, partially offset by growth in working capital. The increase in working capital was driven by continued price inflation, higher fourth quarter sales volumes, and normal Q4 seasonality. This is an area where we see opportunities for improvement, and we are targeting a long-term range of 12%-14% of sales. CapEx in 2022 was $76.4 million, approximately 1.5% of revenue, and consistent with our long-term guidance. Regarding capital allocation, for the full year, we spent approximately $15 million on acquisitions and approximately $250 million on share repurchases. Over the long term, we will continue to prioritize a healthy balance sheet, internal investments, synergistic acquisitions, and opportunistic share repurchases. In terms of acquisitions, we have opportunities for growth in all three end markets we serve, as well as a healthy pipeline of acquisition targets. There were no significant changes to our debt structure, and our outstanding short-term and long-term debt balances remained at just under $1.5 billion. We ended the fourth quarter with net debt leverage of 1.31 times trailing twelve months Adjusted EBITDA. This is down from 1.49 times at the end of the third quarter and down from our pro forma leverage of 2.2 times after we acquired DI in October 2021. Total liquidity on December 31, 2022 was $672.4 million, including cash of $240.1 million and an accessible revolver of $432.3 million. Moving to annual guidance. The backlog of single family units under construction should continue to support our residential sales into the second quarter of 2023. The backlog of multifamily units is stronger and should support our residential sales for the full year. This time, given this current backlog and the recent trend on housing starts, we are expecting our residential sales to decline mid to upper single digits in 2023, as we expect single family activity to be slower in the back half of the year. We believe the long-term fundamentals of the housing industry are solid, and we were very pleased to hear some of the recent optimism expressed by a number of the public builders. We are confident our leadership team, technology tools, and flexible cost structure will ensure that TopBuild will continue to outperform in any environment. Our expectation for our commercial and industrial end markets, which is now 35% of our total revenues, is more optimistic. We have a strong backlog in bidding activity and new projects is very active. As a result, we are expecting sales in these end markets to expand by low to mid single digits. Putting all that together, we are projecting total 2023 sales to be between $4.7 billion and $4.9 billion, and Adjusted EBITDA to be in the range of $820 million to $910 million. I'll now turn the call over to Robert for closing remarks. Thanks, Rob. In closing, as we look to the rest of this year, we recognize we cannot control the macro environment. What we can't control is how we manage within it, and we are well prepared to operate and outperform if a more challenging environment develops. This is evidenced by our strong track record of executing on our plan, producing solid results, and creating value for our shareholders. We're also excited about our multiple avenues for growth. As I mentioned earlier, we have a combined 20% share of the three end markets we serve, which together represent over $16 billion total addressable market. We are confident in our ability to successfully source and execute strategic acquisitions to further fortify our competitive advantages. As always, I thank our entire TopBuild team for their hard work, energy, and unyielding focus on delivering continued great customer service and strong bottom line results while operating safely every day. Operator, we are now ready for questions. Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from the line of Stephen Kim with Evercore ISI. Please proceed with your. Yeah, thanks very much, guys. Appreciate the all the color. A good quarter, and, you know, exciting times. I wanted to delve in, if I could, a little bit into your outlook that you've provided for fiscal 2023. I guess the first thing on the top line, can you give us a sense for sort of when exactly you think sales are going to turn negative year-over-year? I mean, it basically, is it going to be in the second quarter, or the third quarter? Secondly, within that, I would say your EBITDA decremental that's implied by your guide seems to be as high as about 40%. That's well above, you know, your target incremental of 22%-27%. I was just wondering, you know, why is that so high? What kind of outlook for headcount or price cost does this assume? Okay, Stephen, this is Rob. Good morning. Yeah, on the top line, the way we're looking at it right now, from a residential side of things, we're looking at the single family backlog that's out there. Our best estimate is that's going to last us into the second quarter. You know, from there on, we're modeling single family to kind of line up with what we've seen from a starts perspective here the last 6 months or so. Obviously, there could be some potential upside to that if you listen to what the builders are saying now. It starts, and the spring selling season is strong here. You know, there could be some potential upside to that. On the multifamily side of things, you know, the backlog is even stronger. We're expecting that to carry us throughout the full year. You know, as you look at sales, it's important to remember that's 65% of our sales on the resi side, but on the 35% side, you've got commercial and industrial. On this year's, you know, we got the real opportunity to show the strength of our diversified end markets, you know, with that side of the business. We're expecting strong growth in that side of the business throughout the year. In fact, right now, we're bidding some pretty large projects out in Q3 and Q4. We're feeling pretty good about that side of the business. From an EBITDA perspective, you know, on the high end of our guidance, we're right around, you know, the targeted decremental of around 27%-28%. You know, to your point on the, on the lower end, in the midpoint, it is higher. You know, we're looking at, you know, potentially holding on to labor through the downturn or because we're thinking it's going to be an air pocket Q3, Q4, because ultimately, you know, we're very positive on the long-term fundamentals for residential housing. I mean, if you look at it, you know, just how we've seen demand snap back since mortgage rates got down close to 6, you know, we want to be prepared given how tight labor is when that demand does come back, you know, whether that be in Q3, Q4, or Q1 of next year. Stephen, this is Robert. I think as you've seen, right, we've really done a great job of working the productivity of our business. You know, we have a great command and control of our business in the field with our operators. You know, we're always watching the productivity of our crews. If we have to make adjustments, we will. We've shown that in the past and always come back stronger if there is any type of, you know, slowdown or whatever. We're pretty comfortable with that. We're gonna, you know, as Rob said, we think this is short-lived, you know, we'll watch our labor closely and keep that product labor that we've done a great job of building up. Okay, great. That's helpful. I guess my second question relates to the distribution side. You talked about the lumpiness, which, and you certainly addressed this before. Sounds like you got some good projects, large projects that you're bidding on now. I guess in general, though, would you regard the lumpiness, quote-unquote, that we saw in 4Q as a result of previous strength? You know, in other words, was it sort of, you know, a result of some business having been pulled into the third quarter? Or is it rather more like some opportunities that you think got pushed out sort of into 1Q or 2023? Or 2023? Then also, you're reminding me, you know, you talked about this positive commentary that the public builders have been talking about, and that's certainly true. We've been hearing that from private builders as well. I was just curious, have you, in your conversations, have you seen any difference in the commentary between large and smaller builders? Have you seen any difference in their behavior as they maybe get ready to potentially ramp up starts later this year? Yeah, Stephen, this is Robert. On the industrial commercial side, yeah, it's opportunities that have been pushed out. You know, I think as we talk about 2023, we look at our projects that we have in backlog and we look at bidding, that's why we are confident in that growth here in 2023, to Rob's point, for the back half of 2023 as well as we're looking at projects that'll be coming online. Relative to the builders commentary, yeah, we're seeing and hearing that as you have. You know, the public builders have several come out with a pretty positive commentary on, you know, December, January, but also the start of spring selling season. We're hearing it from our local regional builders as well. I think if you said any change, you know, the builders are seeing that piece of it. What it's really laid out is, you know, they're really appreciating the value of, you know, the labor that we provide, the service that we provide, making sure that we have the material, 'cause the material's still tight, especially certain material and stuff. You know, they really do appreciate that value. That's why you heard in prepared comments, traction with the price increase that was announced December and January. We're seeing that. I think that's, you know, builders wanna make sure they're prepared, and we're lined up with them for that. Excellent. Thanks so much. Thank you. Our next question comes from the line of Joe Ahlersmeyer with Deutsche Bank. Please proceed with your question. Yeah, thanks very much. Good morning, everybody. Morning. You grew install volumes ahead of completions throughout the entire year, then the footstep gap was particularly notable. It looks like even on a stack basis, your price mix had started to erode a little bit for the first time, really, since we had entered this pricing cycle. I mean, certainly a strong revenue finish to the year, but that composition trended, I think, a little bit differently from your peer who reported yesterday, who also at the time reiterated that value over volume mindset. Could you maybe just speak to that composition in your fourth quarter growth and if this is maybe the early signs of differing strategies there around price rationality as we go into the next year? Yeah, no, we feel really good about our fourth quarter volumes. You know, what we've seen and what we've heard from the builders that is, you know, with starts slowing down, trades in front of us, things have improved. We think we've gotten to a lot more work. Obviously, you know, we're also happy with the price side of the equation. You know, we manage that very well, and you can see that reflected in our margins for the quarter with the expansion we did there. Yeah. I think, Joe, if you look backwards at our price performance, you can see that we delivered price a lot earlier as things were moving along here. If you look backwards at price, you'll see that we were very strong on price a lot earlier in 2022, and then the volume has just come along with it and the margin expansion to that point. As we talked about, you know, getting more than our fair share. There's nothing but positive in what's happened on the price side and the margin side. We just executed. The team in the field did a great job of executing earlier on that price and continues to deliver price. Yeah. Yeah, that makes a lot of sense. Looking at the margins slightly differently in the outlook, at the high end, you're looking at flattish EBITDA margins, even as you probably will deleverage on SG&A and then also have some mix, mixing down on the industrial side. It seems like your gross margin into next year is even flat to slightly up. Is that accurate? Obviously, we don't, we don't guide on gross margins going out. You know, we feel, we feel good with the guidance we got out there. Like I said, on the residential side, we obviously see, you know, the air pocket coming, but we feel good about the long term, and we'll be prepared to adjust if it's, if it's worse than we're thinking. Like I said, you know, with recent commentary, we think there's potentially upside to that. Then, like I said, on the commercial and industrial side, we're excited about the backlog and bidding activity that we got going on on that side of the business. I really think 2023 could be a year where you see our diversified end markets really helping support TopBuild's results. Absolutely. Thanks a lot. Take care. Our next question comes from the line of Phil Ng with Jefferies. Please proceed with your question. Hey, guys. Congrats on another strong quarter. Encouraging to hear that you mentioned that trades ahead of you are loosening up. I'm just curious if spring selling season is strong, how quickly could you see that demand kind of ripple through your business? Separately, certainly more optimism from your builder customers, but with rates kind of ticking back up, you know, what's driving that optimism? Is that something that we should be looking out with rates kind of perking back up here? Yeah. Good morning, Phil, it's Robert. You know, as we think about, you know, maybe taking the second question first. Yeah, I think, you know, they saw unusually good traffic in like that December timeframe. I think some saw historically strong traffic in January to start the spring selling season. I think, you know, what the builders have said, some people, they're on the sidelines as rates stabilize a little bit, even tweak down even, you know, although there's been some recent changes there. You know, some folks have definitely come off the sideline for that. I think that's what's driving their optimism as well. You know, I think there's no question we've been underbuilt for many years here. I think maybe there's some receptiveness of the new rates and where things are gonna end up there. Let's see, what was your first question? Sorry. The ability to kind of react to- Yeah -a strong spring selling season with the trades loosening up, how quickly could that ripple through your P&L? Yeah. You're right. Trades in front of us have definitely loosened up. You see that as Rob talked about the, you know, the backlog and as we dug into that backlog here in Q4 and the work that we completed. Things feel good. As we're getting on job sites, no doubt that we're getting on job sites quicker, especially with the production home builder. You know, let's say that spring selling season continues to be strong here call it in the month of March, I think we could see some of that work start to ripple in potentially end of second quarter through the summer months and definitely into the fall, which as you know, is a seasonally busy time. From our perspective, we'll be ready for that. That's why we keep talking about our labor, our labor productivity, and how we're preparing for that. Really, you know, as you heard us talk a lot about before, how we have great control and insight to our business. We're, we're monitoring branch by branch what's going on in performance, what's going on in bidding and stuff. We're always ready to kind of pull the lever that we need to at a local level anytime. Super. Robert, I guess at the last conference call, you called out a watch out for 2023 would be, you know, potentially risk to your margins if, you know, the insulation manufacturers are seeing a lot of pricing power because it's tight and maybe your builder customers asking for concessions. I mean, your guide for 2023 EBITDA margins of 80 basis points compression is pretty benign. Can you give us some perspective on how you see yourself kind of managing price costs, in a softening demand, backdrop and, your ability to kind of react on the cost side as well? You got it. It's really about the value and the quality and the consistency of what we offer, Phil Ng. I mean, that's really what's driving it. Let me give you a few different data points there. You know, as there has been some uptick in optimism that obviously, you know, builders wanting to make sure they're partnering with somebody that's gonna have the material, gonna have the labor, gonna be there for them, especially if there's a spike. That definitely plays to our strength of what we provide. If you think about, you know, labor is gonna remain tight, there's no question about that, even if there is a little bit of an air pocket. The second thing is material. As you look at that mix of business, and even as you look at the, at the multifamily being strong, the loose-fill material is gonna continue to be tight. Part of the reason is in loose-fill material is heavily used in multifamily construction. If I think about midfloors, some of those types of applications. The fact that that business continues to be strong in multifamily, it's not gonna do anything to alleviate the material tightness. As you think about those dynamics that have transpired since, say, go back to October, our value, our quality, and our service is definitely appreciated and noticed, and I think that's why you see us talking about traction in the different areas here. Okay. Great call. I really appreciate it, guys. Thank you. Our next question comes from the line of Mike Rehaut with JP Morgan. Please proceed with your question. Thanks. Good morning, everyone. Morning. I just wanted to get a sense of price carryover in 2023. You know, you started to see some deceleration in the fourth quarter. I think average price up 10% versus 14, with, you know, slowdown in both segments. How should we think about the first and second quarters, assuming, you know, no additional pricing kind of comes through the industry in 2023? Yeah. Michael, this is Rob. We've got our assumption for price obviously baked in. We don't break out price versus volume. To your point, you know, the carryover impact is certainly gonna be stronger the first half of the year. The thing to keep in mind, as you've seen our, you know, our price has come down throughout the year, but we're also comping to quarters last year where we were getting price, you know, early on and benefiting from it as well. You got the comp that's going on there. As we look forward, right, you know, we're expecting certainly not the same type of year in a pricing environment as what we saw in 2022. We've got that baked into our guidance as well. Right. Okay. No, I appreciate that. I guess Similarly, on the topic of price, if you would comment at all on the, you know, January price increase by the manufacturers and, you know, any sense of, you know, how that's being, you know, the amount of that that's being realized in the industry at this point. Mike, it's Robert. You know, good traction on the increase. Yeah, I think it goes back to the value that I talked about earlier, relative to labor. Definitely, loose-fill material is still tight. You know, the manufacturers obviously have communicated that. The builders recognize that as well. You know, as we all know, no new supply coming on here in 2024. Capacity is gonna be constrained definitely on the loose-fill side. Again, we even talked about how that may impact us some by maintenance that's gonna happen in the industry as well as kind of that multifamily mix. We see the material remaining tight here in 2023. Okay, great. Just one last one again, I guess just more conceptually, when you think about you know, where your margins are, you know, you kind of have stuck to the, you know, decremental margin guidance long term or decremental/incremental. You've seen obviously a nice improvement over, you know, the last several years. You know, obviously, there's a value that you provide, but the builders at the same time have been talking pretty consistently about, I guess, pushing back on the trades or to the extent that things loosen up a little bit. Have you started to have any of those conversations with your builder customers? You know, how should we think about, you know, current margins today, for example, in TruTeam being, you know, several hundred basis points higher than a few years ago? Yeah, Mike. Robert, I'll start with this, and I'm sure Rob Kuhns will add on anything as well. You know, and if you think about it and what we've talked about before and others in the industry, I mean, right, our work is less than 2% of the total cost of the home. At the same time, it follows, you know, it's important to get a proper inspection after that before you know, to make sure you don't hold up other trades. I think given that, I think given the labor component of our package, I think also, again, the realization of the tightness of material and stuff, I think the builders recognize that value. I think, you know, also, you know, codes are changing. Things are making sometimes it even tougher to make sure that things are passing inspection. I think that's recognized. I think the value will continue to be recognized. Again, I would say if we, if we think about, you know, margin trends looking forward, that even if there is a, an air pocket, which we think could be, you know, brief, nobody can forecast exactly the timing of that as well. Labor will still be tight. Labor will still be tight, given maintenance in the industry, given that mix of multifamily, even given, you know, could be some tailwinds from some of the tax incentives for people to reinsulate their home from a repair/remodel perspective. That's gonna tighten material if you think about loose-fill, typically that's people blowing their attics, right? You know, that's gonna continue to drive tightness on material here in the industry in 2023. I think, you know, our guidance does a good job of reflecting how we think about that. Really, if we think about it's, you know, anything that can happen there, we're gonna look at our labor very carefully. As I mentioned earlier, which we talked about earlier, I think we feel good confidence about our trends there and, you know, that control and insight we have on our business and how we run the business every day and stuff, I think we've proven that track record of execution in the past. Mike, and this is Rob. I think the only thing I'd add to that, right, is some of that margin expansion is definitely from, you know, our operational team's relentless focus on driving process improvements. How do we make, you know, this branch more efficient? How do we make that branch perform like this higher performing branch? How do we make our installers more efficient? You know, a lot of that is changes we've made in the business that's gonna stick. Great. Thank you so much. Thank you. Our next question comes from the line of Keith Hughes with Truist Securities. Please proceed with your question. Thank you. Amongst the guidance, you had talked earlier in the call, expecting mid to upper single digit declines in residential. Can you just talk a little more, is that a dollar number? Any kind of indication on price versus units within that would be helpful. Yeah. Keith, this is Rob. Yes, that is a dollar figure we're talking about. Total residential sales down mid to single digits. Like I said, that's gonna be driven by, you know, what we're seeing on the single-family start side right now. We're expecting that to roll through, you know, Q3, Q4, and impact our single-family volumes there. As far as, you know, price volume, that's really what's gonna drive the volume side of it. From a price side, like I said, we don't break out our guidance. We do expect this year for inflation to stabilize. It doesn't mean we won't get a price increase at some point this year, but, you know, we're expecting it to be a more stable year than what we saw in 2022. Are you assuming, though, that some of the price increases that last year will roll into that number, you know, providing at least in the first half of the year some growth? Is that a fair assumption? Yes. Yes, Yes, definitely. All right. Thank you. Our next question comes from the line of Adam Baumgarten with Zelman. Please proceed with your question. Hey, good morning, everyone. I guess just going back to the residential revenue guidance of mid- to high-single-digit declines. I mean, that obviously includes some level of positive price. Could you maybe break out the assumptions on single family versus multifamily? Sounds like maybe single family could be down from a volume perspective, double-digits. Is that fair in your assumption? Yeah, I mean, like I said, we don't break out our guidance there. You know, if you look at the single-family starts data, you know, over the past six months, it's, you know, down 15%-20% year-over-year. We are expecting some of that to start to roll through the completion side of things here in the second half of this year. Okay, got it. Just thinking about the headcount reductions, and you guys are holding labor just given the, you know, perceived kind of short-lived downturn here. What would it take from an end market perspective for you to start making more permanent headcount reductions at this point? Yeah. From thinking about it from that perspective, Adam, I mean, we're always monitoring at a local level. If you think about how we work the network, right? I mean, we're always gonna move labor around. You know, I always use the Florida example that if Tampa's slow and things are percolating in Orlando, could be multifamily volume or something like that, we're obviously gonna move labor to Orlando and make sure that we're, you know, more than satisfying the customers. Obviously that plays well for us in the future. We're able to use our ERP system for that. We're constantly monitoring that. We do that even today. We're looking at productivity and productivity by branch. It's kind of just part of our general playbook as a company. If there was to the point earlier about the starts and stuff, if we think there's a small air pocket there, or we can give up our productive labor for a very short air pocket, you know, maybe not. If things were to show anything for, you know, multiple weeks or something like that, and again, we get the leading indicators, if you think about bidding and things like that from our ERP system, we can move pretty quickly. That's the, that's the beauty of the model and how we operate. You know, even thinking about, you know, we talk about labor, but the other thing is, you know, I remember from the great recession stuff, you know, you don't sign long-term leases, you don't have large facilities, you optimize your footprint across the country, those types of things. I mean, that's part of our model. That's part of what we've changed in the business. We're ready very quickly if things show something in one market compared to another. Okay, great. Thanks a lot. Best of luck. Thank you. Our next question comes from the line of Jeff Stevenson with Loop Capital Markets. Please proceed with your question. Hi, thanks for taking my questions today, and congrats on the nice quarter. Thank you, Jeff. You reported another quarter of elevated gross margin expansion as you continue to benefit from strong volume and pricing gains. Moving forward, how should we think about the cadence of gross margin as you start to lap tougher pricing comps from last year's increases? Yeah. This is Rob. As I've said, we don't guide quarterly on margins. you know, as you look at how things are gonna roll, if you're looking at our EBITDA margins throughout next year, you know, with volumes coming down on the residential side, the back half of the year, I would expect margins the first half of the year to be a little bit stronger. In addition, we think price is gonna be stronger the first half of the year. as I would think about, you know, the cadence of EBITDA margins through the year, I'd think about the first half being a little stronger than the second half. Okay, great. It sounds like your M&A pipeline is active right now. Last year, you made 5 bolt-on residential acquisitions. Wondered if you're expecting more opportunities this year, especially since the integration of DI is largely complete. Yeah, Jeff, this is Robert. You hit on it, right? I mean, last year, we had purposely decided to focus on the successful integration of DI, which the team did a great job of accomplishing. Did you not only see the successful integration of DI, you saw the tremendous operating improvement in those margins in the DI business or in our special distribution business overall, but definitely in DI. You know, that became part of TopBuild and all the benefits that became part of that as well. Really happy with what happened with DI in 2022 and really how that diversifies our business for the future. We think you're gonna see the value of that here in 2023 and going forward as well. To your original question, yeah, the pipeline is busy. You saw a nice acquisition that we completed in January, SRI, $62 million on the residential installation side of the business. We would say that we're really active right now on the M&A activity, given, you know, given DI being done, given what we're actively working today. Really, you know, as you know, M&A's become a core competency for us. The great thing about our model now in that diversification is we have this multiple avenues for growth across residential, commercial, and industrial, and we're pretty active in all areas. We're super excited about the M&A activity right now and what you can expect to see from us here in the future. Great to hear. Thank you. Our next question comes from the line of Trey Grooms with Stephens Inc. Please proceed with your question. Hey, good morning. Thanks for taking my question. The 35% that is commercial and industrial, you're expecting low to mid-single-digit revenue growth there. You know, that's throughout, I guess, the year, and sounds like you've got pretty good visibility there. Can you parse out what you're expecting between maybe the lighter side of commercial that follows residential, versus, you know, that heavier industrial side as you kinda look through, you know, the visibility you have currently? Yep. Good morning, Trey. This is Robert. I'll try to give you some indications there. Rob will add on. You know, pretty strong on both. We talked, we talked on the call from the start on the light side of the business, you know, all the residential branches can do that work, and they're doing a really good job of executing upon that growth. Now, I mentioned on the call, I think we talked to you about this last year at Investor Day. We have this new proprietary lead generation tool that really brings together leads from across the country. We're feeding those to the branches, and they're doing a really nice job of bidding those, so think about it this way, you know, getting more leads, bidding more projects, winning more projects. That's kind of the cadence of what's happened there. Light commercial is benefiting from that and that approach, which we built here over the past couple years. Mechanical, just, as we think about the backlog, the projects that we're bidding, the projects that we see, we expect that to be strong this year, another year of nice growth and probably stronger in the back half of 2023, which we think will play to this diversified market and this diversified business and end markets that we serve. We think that model is gonna play really well here in 2023, the way the work's coming online, and how that flows through the year. Okay, perfect. I'm sorry if I missed this, on sticking with kind of that, the MI business there, you know, and the lumpiness that you talked about kind of hitting the volume on the distribution side in the most recent quarter. Is that, you know, with the visibility you have there, again, is that expected to negatively impact the distribution volume in the coming quarters as well, or is that pretty much behind you for now? Yeah, we would say nothing for the full year here, Trey, as we look at it. You know, we could always advise that there could be lumpiness quarter to quarter or something like that. Yeah. As we think about the full year, we don't have concerns from that perspective. Yeah. The cycles for that business, Trey, tend to be, you know, less steep than what we see on the resi side. Over the long term, you know, the rises and dips will be less. In the short term, you do see the quarter-over-quarter gap sometimes. Right. Okay. Well, thank you very much for taking the questions. Good luck. Thank you. Thanks, Trey. Our next question comes from the line of Dan Oppenheim with Credit Suisse. Please proceed with your question. Thanks very much. Appreciate the comments you've made there in the light commercial and what you're doing from the serving that from the residential branches. I guess wondering what you see in terms of potential for some offset there, and I guess can that help on the margin side by keeping those in the residential branches sort of active, even if the single family is slow in terms of keeping those decrementals sort of down to the having less impact there as we go through the air pocket here? I'm just curious about that. Yeah. Dan, this is Robert. You've got it exactly right, and that's why we built the diversified model and the multiple avenues for growth. That's why we built the model that we have. You hit on it, right? Those residential branches can do that light commercial work, and so it gives them the chance to build that backlog, so it makes for smoother volumes, if you will. Keeps the labor busy. By the way, that's good margin work also on the light commercial side. It's part of the strength of this model that we built, the diversification that we built. You know, hearing us talk about two key themes here, right? Multiple avenues for growth and why we believe we can outperform in any environment. Great. Thank you. We have reached the end of the question and answer session. I'll now turn the call back over to Robert Buck for closing remarks. Yes, thank you for joining us today. We look forward to talking with you in May as we report our Q1 results. Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.