Thanks everybody. We'll go ahead and get started. Kicking off our next meeting here, and joining me today is TopBuild's CFO, Rob Kuhns, and Investor Relations- Hi, here. Tabitha Zane. First off, I wanna say thank you to the TopBuild team, as always, for joining us. TopBuild is the largest new residential insulation installer and distributor in the U.S., with also a strong presence in industrial and commercial end markets. I'm gonna just jump right into Q&A. I'll start it off, and then open it up for the audience to ask questions as well, so don't be shy. But thank you again for joining us. Yep. I guess first off, if we could maybe just talk about, you know, the demand, kinda what you're seeing out there from a demand standpoint, on the residential side. Then maybe, you know, given what we've seen from orders and the commentary from some of the home builders and things like that, kinda, any thoughts you could give us on your outlook there? Yep. Yeah, so on the resi side for us, it's been an interesting year, right? We came into the year with a nice, strong backlog on the single family side of things that really, you know, carried us into the second quarter. We had seen the decline in starts that happened on the single family side, you know, late last year and coming into this year. And so we knew that was coming and could plan and get ahead of that, and really build up our backlogs on the multifamily and light commercial side of the business, which has been a great story for us this year to help offset the slower single family we saw in Q2 and Q3. The good news then, that we've seen this year is, you know, starting, you know, around the April-May timeframe, we saw starts start to accelerate a little bit on the single family side. We started seeing some of that benefit in Q3. Sequentially throughout Q3, our single family revenues got better from July to August, August to September. Still not quite back to prior year levels, but, but coming back, and then that, like I said, that multifamily activity has been, has been very strong. So, you know, sitting here today, you know, with what we know today, looking out into 2024, you know, we see multifamily starts slowing, our bidding activity slowing on that side, but we know we've got a, a, a really good pipeline of, of multifamily. You know, should last us well into next year. And then, you know, on the single family side, you know, things are good. You know, what we're hearing from the builders is they plan to grow next year. And so we're optimistic there that, you know, we'll start to see a shift back more to the single family side of things. Obviously, if we get some relief in rates next year, that could even be an additional tailwind on that side. And the important thing to know on our business is, you know, a unit of multifamily and a unit of single family are not equal, right? We get more revenue, more insulation per unit, almost double, a little more than double, on the single family side than the multifamily side. Looking at that, as we look at next year, we think next year could be another year of growth for us. Great, and that's specifically around just the residential side. Absolutely. How about the non-res side for you guys, commercial? Yeah. Yeah, so that's been a great story for us this year. So, we're up, you know, year to date, around 6%, 6.5%, as TopBuild consolidated on our commercial industrial side of the business has been a nice offset to the slowness on the single family side. Our backlogs there are still good, both on the... You know, we do commercial work both on the install side of the business, as well as on the distribution side of the business. It's a little bigger on the distribution side. I'd say on the install side, we're about 85% resi, and on the distribution side, it's about 40% resi. So as we look at that business, obviously, you know, some of the leading indicators out there, ABI, some of the Dodge Data, you know, showing some signs of weakness out there. You know, those tend to be nine-12-month leading indicators. Nothing that we've seen show up in our business yet. Our bidding activity is still good. The backlog is still really strong. So as we look at 2024, we see potential growth on the commercial side as well. And an important part to remember there, too, is on the distribution side, we're distributing building insulation like we use on the install side, but we also distribute mechanical insulation. Mm-hmm. And that business has a little less cyclicality to it, 'cause there's a heavy repair, replacement, recycle, repair, replacement cycle that goes on with mechanical insulation. So on the distribution side of our business today, about a quarter of our revenue is from that maintenance and repair, which is more of a recurring cycle. So, you know, between that and what we have in the backlog, we feel good about next year. Great. I guess, you know, on the last earnings call, you mentioned some increased availability of materials. Could you speak to, you know, what you're expecting as far as from a capacity increase or anything like that, or just availability of insulation, kind of today and looking forward- Yeah ... the backdrop that you just described for- Right ... your outlook? Yeah, I think, I mean, it was an interesting quarter from a product availability on the fiberglass side. So we started Q3, I'd say, with material a little bit looser in the industry. You know, and by the end of the quarter and sitting here now, you know, going back on allocation with a couple of the manufacturers. So, Mm. Things have tightened up. You know, some of that's on the demand side. Like I said, single family starts, or our single family revenue, single family completions basically improved throughout the quarter. So again, with that, using more insulation per unit, that definitely affected things on the demand side. And then on the supply side, you know, you got some of the manufacturers taking some maintenance, some downtime on their production lines, so that's also had an impact as well. So, you know, sitting here now, you know, like I said, tight, tight supply, looking at next year, potentially accelerating demand, I think it's gonna be another year of tight material for us on the insulation side of things. Okay. All right, and that usually, you know, bodes well for manufacturers kind of going after price. Is that kind of... I guess, what's your, what's your expectation there on the pricing front? And, 'cause, you know, the last one I think you said had gotten pushed. So I guess with things, was the reason it was pushed is because things were a little loosened up at the time, and then now they're tighter, so what's your thoughts now? Yeah, I mean, you're exactly right. So as that one was announced, we were sitting in that third quarter with a little bit looser material. You know, didn't see as much stickiness with that price increase. You know, but sitting here today as we look into next year, I, you know, I won't be surprised to see, you know, the manufacturers taking price increases. It's all gonna depend on the demand environment. You know, it's gonna depend on what starts do. Obviously, November and December starts will be important for that, and in Q1 as well. But given what we know and what the builders are saying today, I think demand will be good, and that'll make for tight material and likely some price increases. All right. Thank you, and it makes sense. So, first, I wanna pause and see if anybody has a question in the audience. All right. Yeah, yeah. You got one? A quick one, yeah. Just as you look to 2024, you think about, you know, potentially growth on the residential side with an improvement in starts. But is it not, you know... The completions have stayed really high this year, and so doesn't that create sort of a higher bar that you have to cross in order to see volume growth? And then even with those higher completions you've had this year, you still think you can see growth? Yeah, I mean, our work comes... So completions isn't a perfect metric, but it's probably the closer metric than starts today. Our work typically comes kind of halfway in between that time. But like, a lot and this year, more of that completions number is heavily weighted to multifamily. So that dynamic shift from multifamily to single family is what's gonna help us from a revenue standpoint next year. There's been, you know, I guess within the home building industry, there's been some focus around the production builders, you know, taking share. Can you, can you talk about, you know, what that share shift means for you guys, looking forward and, I guess both on the distribution and the install side of the business? Yeah. Yeah, I'd say on the distribution side, it could have a little bit of a negative impact. We'll start there, just in that our distribution business is selling to the smaller installers, the smaller mom-and-pops, that aren't gonna participate as much with the bigger builders. But we'll get that benefit on the install side, where, you know, where we do participate more with the bigger builders. And so, you know, the production homes certainly less insulation than a custom home, but we do gain a lot of efficiencies from the production builders by being able to go to one job site and knock out multiple units in a day. So ultimately, we don't see it as a major headwind to our business at all. Yeah. I guess, is there, with the bigger home builders, the more, you know, outside—even a regional guy, do they do... Is it—is the pricing a different kind of pricing setup for those types of customers? Is it more, like, centralized pricing or more national price, or is it all kind of the same? No, it's all locally managed, right? Okay. So pricing, you know, for D.R. Horton is gonna vary across the different- Yeah ... regions of the U.S., the different cities of the U.S., and it's always a local negotiation. Yeah. So it works the same way with the big builders as it does for the regionals and the- Yeah ... and the custom builders. Okay. I didn't know if with larger, more national guys or just even regional guys taking some share, if there was maybe some opportunity, given your scale, to maybe take a little share with them, along with them? I think there is. I think because they appreciate the volume they gotta do, they appreciate the scale we bring- Yeah ... the labor, the material, knowing that we're gonna have the material. 'Cause for them, what's important is getting past our step of the process, right? Yeah. They wanna get through, they wanna know that the guy that does their insulation has the material, has the labor, it's gonna get done so they can pass their inspection and move on to the- Yeah ... to the next step of the process. Yeah. Okay, pause for a second. Anybody... So how are you thinking about, you know, with—you guys have been doing, you know, some the mechanical insulation you talked about, but also, I'm not sure if it falls into the same category, but we toured a plant of yours, where you did some insulation, I think for metal buildings. Yep. So what is the... and it seems like that's been a direction you guys have been going more, is mechanical insulation and also the metal building side. So how are you thinking about specifically that industrial and kind of metal building end market as you look into next year? And is that still kind of an area where we would expect you to, or should expect you to kind of focus M&A in that direction? Yeah. Yeah, so as I was saying, I think that end market, we're cautiously optimistic for next year on that mechanical metal building side of things. You know, there's you know. The metal building goes into everything from your Costco warehouses to your data centers. It can be used in schools, churches. That was an area where we have had a nice overlap. We were already in that business with Service Partners, and when we bought DI, that was about 15% of their business, and so we had a nice overlap and synergies there. And then DI got us into the mechanical space, which became kind of the third leg of our insulation stool, right? We were already in the residential, the commercial building, that got us into the mechanical. As we look at all of that today, and going forward from an M&A standpoint, you know, it's about a $17.5 billion addressable market, and we've got combined share across all three in the low 20%, right? We're the number one player in all three markets. But, you know, we've got a lot of white space out there still to grow. Now, to your point, there's probably more white space on that commercial, mechanical side of things. And so, you know, it's not our strategy to necessarily grow more there, but from a pure math perspective, there's more white space there. But, you know, I point out to people all the time, we did our third and fourth largest residential deals we've ever done this year as well. So, you know, there's still- Mm ... still room for roll-up out there in that area. And, you know, what we know is we've got advantages in those markets, and, you know, we plan to continue to take advantage of that and grow, and, both organically and through M&A. And to that, you know, that's one place I wanted to spend a little bit of time. Can you update us, what is your market share in the insulation install, and then distribution side currently? Yeah. Yeah, so as you go across those end markets we talked about, that make up the $17.5 billion, there's about $6 billion in the residential building insulation market. We're probably, you know, low 30% share on the install side. We probably touch another 10% through our distribution business. On the commercial building, which is, you know, all types of commercial structures, including the metal building, it's about, also about a $6 billion end market. We got about a 10% share, and then on the mechanical side, mechanical insulation, we've got it's about a $5.5 billion end market, and we got about a 10% share. So with the SPI acquisition, which we announced last year, which will be closing here in 2024, they actually serve all three of those end markets more heavily on the mechanical side, but they have a spray foam business that touches the residential space. They've got some metal building that touches the commercial building space, and then they also have the mechanical insulation. We'll be more kind of mid-teens in that mechanical space post the SPI transaction. I got you. And even with the, you know, commanding share you have on the residential side, that, you know, that's one question I get from time to time is, you know, is there still ability for you guys to is there still enough white space out there, ability for you guys to continue to grow through M&A in, on that side of your business? To your point, the two that you did this year were the largest you've done. But the answer to that would be, from you, it would be that there's a long runway, or I mean, at what point do you feel like you've kind of saturated that side and you're gonna have to kind of start looking somewhere else? Yeah. We don't feel like we have, right? It wasn't our largest deals on resi, it was our third and fourth, just to- Okay ... just to clarify that, so. All right, thanks. But it's highly fragmented, right? So there's us, there's IBP, and then after that, it's highly fragmented for the rest of the market. You know, a lot of smaller players, so it'll take some time to continue to roll up, but we still feel like there's plenty of white space there. Okay. I guess kind of going back to your last comment about SPI, can you talk about the synergies that you guys have laid out there? I think it was $35 million-$40 million, kind of what, where those are coming from, and- Yeah ... timing, expectations, that sort of thing. Yeah. So, $35-$40 million of synergies, we estimate it'll be about half material synergies, and then the other half operational, and operational is gonna be everything from, you know, optimization of freight, it's gonna be leveraging IT spend across the two companies, back office synergies we can realize. You know, we feel really good about that synergy number. I mean, we expect it to take two years to get there. We'll be at about half of that run rate after the first 12 months. But we feel really good given, you know, having done the DI transaction. DI was a very similar-sized company. They were about $750 million in revenue when we bought them, about 10% EBITDA. They're now part of our specialty distribution segment, making mid-teens EBITDA, and we've realized the high end of the synergies on that deal. So now, with SPI, you know, we feel even better, given they look a lot like DI, about $700 million in revenue, about 11% EBITDA today. You know, get them up to our mid-teens with the synergies we've got out there. You know, we feel really good about that. And, you know, with the synergies, even on DI, we're still continuing. Robert talked a little bit about it on our call, about kind of the second phase we're entering there now, where we're really starting to take a hard look at, you know, what are the options between our legacy distribution, building insulation distribution business, Service Partners, and DI? Where can we co-locate branches, put inventory in more strategic locations to either support sales growth strategy or to reduce freight costs, right? Yeah. That's... We're in the early innings of that, but something that we definitely see as a big opportunity to realize a second set of synergies with DI. When you think about, you know, putting another, you know, 90-100 locations from SPI onto that same footprint- Mm-hmm. Those opportunities just multiply. Yeah. Is there that market, the mechanical insulation specifically, you mentioned your share there and kind of where it's going, but what does... Is that industry also fairly fragmented? What's the competitive landscape like there? Yeah, there's another, you know, I'd say there's another handful of players, you know, probably not quite to SPI's size, but, you know, north of $100 million in revenue. Hard to say for sure because they're all privately held companies. Mm. So there's a handful of chunkier deals in that space. We talked about that when we bought DI. That was one of the things we really liked about getting into that space, is there would be some chunkier deals out there in the future, and SPI was certainly at the top of that list for us, and we should be closing on that here in 2024. So there's still some chunkier deals, and then it's very highly fragmented after that. Okay. All right. So you guys are gonna be generating pretty decent free cash flow. As you think about kind of next year from, you know, working capital, CapEx, and so forth, is there anything to kind of be aware of as we think about, you know, your free cash flow generation next year? Yeah, I mean, it's been a great free cash flow year. You know, we're sitting at about $540 million year to date. I think that's up 93% to prior year. You know, if Q4 goes to plan, we should be close to $700 million for the full year. You know, and it's been a great story of the business all along. I mean, we're a business that doesn't require a lot of CapEx, that generates a lot of free cash flow. Our CapEx runs, you know, 1.5%-2% of sales, basically just replacing the fleet and equipment we use on the job sites. Nothing unusual coming up there or anything unexpected coming up on that side of things. Probably the one thing to point out this year, you know, the inventory improvement we've made this year- Mm-hmm. We've you know really focused on getting our inventory days down. And so we've taken 12 days out of our inventory, so that's more of a probably one-time benefit- Yeah ... to cash flow this year. Yeah. So I wouldn't plan on that for next year, but, you know, even without that, you know, we'd be north of $600 million this year of free cash flow. Okay. All right. And as far as what's kind of the normal inventory, so I guess going into next year, you feel like you'd be kind of making into a, into a more normal kind of inventory working capital type situation? Yeah. Yeah, no, where we are, I mean, we target 12%-14%. Mm-hmm. You know, we're still slightly above that, just above the 14, so you know, we're always pushing to do more, if we can take out more. Yeah. We'll, we'll certainly try to, but we're not gonna do anything to jeopardize sales either on that side. Right. So with material tightening, might we take some opportunities to take material where we can? We certainly will. Yeah. Okay. Anybody in the audience have anything? I've burned through almost all of mine already. You're efficient, Rob. We get to the answers quick. Yeah, that's right. Anybody? All right. Well, I guess with that, we'll wrap it up. So thank you so much. Yeah. Well, maybe I'll ask you before we do: Is there anything that we didn't touch on that we should have? I think we... I mean, SPI, we didn't talk a lot about, but you know, I talked a little bit about that- Yeah ... and the synergies with it. You know, taking out— You know, I think we initially said we thought that would close in Q4. You know, things have taken a little longer than we expected, which is not uncommon these days— Yeah ... with deals. Yeah. But certainly nothing we think that's gonna stop it, so we're confident that'll get closed here in 2024. We just don't have a date when- Yeah ... at this point. Okay. All right. All right, well, thanks a lot. All right, thanks, Trey. We appreciate it. Thanks, everyone. Thank you. The quickest meeting of the day.