Greetings, and welcome to TopBuild's fourth quarter and year-end 2023 conference call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tabitha Zane, Vice President, Investor Relations. Thank you, Tabitha. 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 also be found on our website. I will now turn the call over to Robert Buck. Good morning. We're glad you could join us today. I'd like to begin by thanking all of our TopBuild, installation, and specialty distribution teams for their hard work and unrelenting focus on working safely, servicing our customers, and continuing to push for operational excellence every day. We have accomplished a lot this past year for our stakeholders, and I'm proud to be part of this talented and very results-driven team. Before reviewing our fourth quarter and year-end results, I want to update you on our SPI transaction. As a reminder, SPI is a specialty distributor and custom fabricator of mechanical insulation and a specialty distributor of building insulation to the three end markets we serve: mechanical, commercial building, and residential. We're in the process of responding to a second request for information from the Antitrust Division of the Department of Justice. In today's environment, these requests have become more common, resulting in a lengthier process. We are complying with their information request and addressing their questions. Now, turning to our financial results. We finished 2023 with a strong fourth quarter, completing another outstanding year for TopBuild. For the full year, gross and adjusted EBITDA margins expanded 120 basis points and 140 basis points, respectively, to 30.9% and 20.2%. Our diversified business model and focus on driving operational efficiency led to successful execution of our overall strategy. We once again delivered on our objectives of achieving profitable growth and outperforming in any operating environment. 2023 was markedly better than we had originally anticipated. When we first issued guidance 12 months ago, we were facing declining single-family starts, steady interest rate hikes, and the possibility of a slowing economy. Despite these headwinds, TopBuild showed positive growth from the outset, exceeding the high end of our initial sales and Adjusted EBITDA guidance. There are many factors driving these outstanding results. I'm extremely proud of our installation segment leadership, who targeted multiple avenues for growth, successfully expanding our multifamily and commercial business to offset the decline in single-family construction. For the full year, and on a same branch basis, we grew our multifamily business by over 50% and our commercial business by over 11%. This strong growth more than offset the low single-digit decline of our single-family sales. At our Specialty Distribution segment, we saw commercial and industrial sales grow 6.3% in the fourth quarter and 4.6% for the year. This revenue includes maintenance repair work on many commercial and industrial sites, driving ongoing stable revenue. Today, maintenance and repair work accounts for approximately 25% of specialty distribution's revenue. In both business segments, our proprietary Lead App tool is providing qualified leads to help our local businesses drive commercial and industrial organic growth. This is a great example of our innovative approach enhancing the sales process. In 2023, we continued to spearhead initiatives to increase labor productivity. Even small improvements leveraged across our installer base of over 8,000 will deliver significant savings to our bottom line. Our common ERP system enables us to easily track productivity and identify future opportunities to drive operational efficiency. This continued focus on improved labor productivity is a distinct advantage for TopBuild as labor constraints persist across the construction industry. Another initiative contributing to our profitable growth last year was the expansion of our special operations team, comprised of seasoned leaders whose sole mission is to drive operational efficiencies and to share best practices throughout TopBuild. They're also tasked with focusing on the bottom quartile of our installation and specialty distribution branches. Their goal is to understand why these branches are underperforming and to put into place the necessary changes to improve their growth and profitability. This team helped drive some great and sustainable improvements last year that positively impacted our top and bottom lines. Looking ahead, they've already identified multiple opportunities that will enhance our operating performance and organic growth in 2024 and beyond. We were also successful on the capital allocation front, completing four residential installation acquisitions that are expected to contribute approximately $173 million of annual revenue. This included SRI Holdings and Best Insulation, which to date, are our third and fourth largest residential installation acquisitions. The other two acquisitions completed last year were Rocky Mountain Insulation and Panhandle Insulation, the latter of which closed in October. These four companies complement our growth strategy and bring experienced installers, great management teams, and strong customer relationships to TopBuild. As always, when we evaluate acquisition opportunities, we look for deals that are accretive to our existing footprint and current operations, meet our strategic growth initiatives, leverage our scale advantages in a meaningful way, and are a good culture fit with our organization. Now, let's turn to 2024 and how we see the year unfolding. While Rob will provide more details and clarity on our outlook, you can see we expect another strong year of profitable growth for TopBuild, led by outstanding execution, a continuous focus on driving operational improvements, and an eye towards innovation throughout the company. As we've said on previous calls, we are bullish on the long-term fundamentals of residential new construction. There remains a shortage of housing inventory and strong pent-up demand. In the near term, we are encouraged by the improvement over the past few months of single-family starts and the outlook for interest rates. As a result, we are optimistic single-family residential new construction could have more upside as the year progresses, and we believe this will be an important source of organic growth. There is also a strong backlog of multifamily work that should keep us busy throughout the year. On the commercial and industrial front, at both installation and specialty distribution, we expect another year of growth based on our bidding activity and strong backlog. Our TruTeam branches have worked hard to build relationships with general contractors in their respective markets, and they are fostering these relationships to ensure we continue to win more than our fair share of light and heavy commercial work. We also expect solid performance this year for mechanical insulation, including new projects and maintenance and repair work. As I mentioned last quarter, we are in the second phase of our growth strategy and operational improvement initiatives relating to our specialty distribution model. We've identified many cross-selling opportunities and see this as another important driver of organic growth. Looking at material and assuming single-family starts maintain their current trajectory, fiberglass will be tight. We are seeing good price realization from the December, January material cost increase. With upcoming maintenance on a number of production lines, we don't see any significant material capacity improvement this year, even with the addition of the Knauf plant, which is expected to be operational sometime mid-2024. Moving to capital allocation, two months into the quarter, we've already inked three deals: Pest Control Insulation, a specialty distributor generating approximately $24 million of annual revenue, and two residential installers, Bravo Insulation and Morris Black & Sons, which combined, are expected to generate approximately $9 million of annual revenue. Looking ahead, our prospect pipeline is robust, and we intend to stay active on the acquisition front. As always, we'll remain focused on acquiring high-quality residential and commercial installation and specialty distribution companies. All three of our end markets are highly fragmented and present great opportunities to reinvest our strong free cash flow to drive shareholder value. Operationally, our team is focused on driving organic growth and exceeding customer expectations. We will also continue to implement initiatives and maintain an innovative approach to drive operational efficiencies and improve labor and sales productivity. Energy codes should continue to strengthen, serving as a tailwind for all areas of our business. Rob? Thanks. Thanks, Robert, and good morning, everyone. We are pleased with our strong 2023 performance, and I wanna congratulate and thank the entire TopBuild team for a job well done. Your hard work to serve our customers and drive operational efficiencies led to another strong year of financial results. Since becoming a public company in 2015, we have grown sales and adjusted EBITDA for 8 consecutive years at compounded annual rates of 16% and 33%, respectively. This consistent track record of growth is something we can all be proud of and build upon in 2024 and beyond. Looking at 2023 compared to 2022, we delivered $5.2 billion in revenue, representing growth of 3.7%. We improved gross margin by 120 basis points to 30.9%, and our adjusted EBITDA margin was 20.2%, a 140 basis point improvement. For the first time in our history, we delivered more than $1 billion in adjusted EBITDA. Turning to the fourth quarter, net sales grew 1.7% to $1.3 billion. On a segment basis, installations net sales grew 3.8% to $790.4 million, as lower single-family volume was more than offset by acquisitions, stronger multifamily and commercial volume, and slightly higher price. Specialty distributions net sales totaled $564.5 million in the fourth quarter, up 0.2%. Lower residential volumes were more than offset by stronger commercial and industrial volumes and pricing. Gross margin for the fourth quarter was 30.4%, representing a 70 basis point improvement compared to prior year. Fourth quarter Adjusted EBITDA totaled $251.6 million, and Adjusted EBITDA margin was 19.6%, an 80 basis point improvement versus the fourth quarter of 2022. Fourth quarter Adjusted EBITDA margin for our installation segment was 21.4%, an improvement of 60 basis points year-over-year. Specialty Distribution's Adjusted EBITDA margin in the fourth quarter was 17.5%, an improvement of 80 basis points versus last year. Other income and expense totaled $10.5 million in the fourth quarter, a decrease of $4.7 million versus the prior year. For the full year, other income and expense was $53.3 million, down from $55 million in 2022. Higher interest income on deposits more than offset higher interest expense on our variable rate term loan in both the fourth quarter and full year. In the fourth quarter, adjustments to net income totaled $7.4 million, and for the full year, they were $21.6 million, which were largely acquisition-related. Fourth quarter adjusted earnings per diluted share of $4.69 represents growth of 6.6% versus the prior year. For the full year, adjusted earnings per diluted share were $19.73, or growth of 15.3% versus 2022. Moving to our balance sheet and cash flows, we are pleased with our 2023 operating cash flow, which increased 71% to $849.4 million, compared to $495.8 million in 2022. Higher profitability and significant progress in working capital drove our cash flow improvement versus last year. Working capital was 13.2% of sales versus 15.7% last year. Our teams in the field did a great job reducing our inventory days on hand by 8 days from last year. 2023 CapEx totaled $64 million, or about 1.2% of revenue, slightly below our long-term guidance of 1.5%-2%. Total outstanding debt at year-end was approximately $1.4 billion, and we finished the year with leverage of 0.56x our trailing twelve months Adjusted EBITDA, which compares to 1.31x at the end of 2022. Total liquidity was $1.28 billion, including cash of $848.6 million, and availability under our revolver of $436.2 million. Turning to our outlook for 2024, which does not include acquisitions that have not yet closed, revenue is expected to be between $5.36-$5.56 billion, and we anticipate Adjusted EBITDA of $1.04-$1.13 billion. Breaking down our revenue outlook, total residential sales are expected to grow mid-single digits. The midpoint of our outlook assumes that single-family starts remain near current levels for the year. Our multifamily backlog is strong, and we anticipate it will support our sales throughout 2024. On the commercial industrial side, we continue to see healthy bidding activity and have a strong backlog. We also anticipate strong sales from recurring revenue on repair and replacement projects. As a result, we are projecting sales for commercial and industrial to grow mid-single digits. Keep in mind that the project nature of this business can cause lumpiness from quarter to quarter. While we did start the year off a bit slow in January due to weather, we've seen a solid rebound in February. With that, I'll close by expressing my optimism and, and confidence in our outlook. I'll now turn the call back over to Robert for closing remarks. I echo Rob's confidence in 2024. We are excited about the year ahead and expect both segments, installation and specialty distribution, to perform well. Our diversified model and multiple avenues for growth enable us to adapt to any operating environment, and our team manages the business with a constant mindset of driving improvements and achieving operational excellence. Before I open it up for questions, I want to let you know this is Tabitha's last call as she retires at the end of March. While Tabitha will be missed, we are very excited to introduce Pie Aquino, our new Vice President of Investor Relations. Pie has over 20 years of IR experience, and she's looking forward to getting to know all of you. Operator, we are now ready for questions. Thank you. We will now 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. Thank you. Our first question comes from the line of Phil Ng with Jefferies. Please proceed with your question. Thank you for taking my question, and Tabitha, you'll definitely be missed. Thank you. I was looking at the press release this morning. I was thinking, I wish more management teams had it structured so clean and concise, so you'll definitely be missed. Thank you. Well, team? Congrats on another strong quarter, strong finish to the year. And you're obviously guiding to another strong 2024. But when I think about a more upbeat environment for single family and continued growth in C&I, I'm a little surprised that your EBITDA guidance assumes EBITDA growth decelerates from, call it, the 2023 level, where you were, you know, dealing with an air pocket in the single family. So any nuance that you want to call out, that's a drag that maybe we may not be appreciating out of the gates? Hey, Phil. Yeah, this is Rob. You know, the main thing to point out there, right, is just that, you know, 2023 was an exceptional year for our team, despite the headwinds we faced, right? If you look at our same branch results for the year, sales were up $88 million. EBITDA was up $95 million, so we had a same branch flow-through of 108%, right? So as we talked about back in Q2 and Q3, we definitely had some overperformance in margins around multifamily and commercial work we had done. We talked about, you know, around $10 million in Q2 that we called out as kind of one-time overperformance. And then similarly, in Q3, we talked about another $15 million. So I think if you look at our, our guide on EBITDA, you adjust, you know, 2023 for that $25 million, you'll see kind of the midpoint of our, of our guidance. We're at around a 23% flow-through, so, you know, right within the range, we guide to 22%-27%. And at the high end, you know, we're, we're at a 29% flow-through. So I think that's probably the key nuance to point out to folks. Okay. That's, that's helpful. And you guys talked about how... Robert, you talked about how fiberglass insulation is still quite tight right now, and I believe mineral wool perhaps might be on allocation as well. Can you give us a little perspective on, you know, how that stacks up versus, let's say, the COVID years when material was super tight? Is this an environment that, you know, will allow you to perhaps support some of the upside in growth in the back half? And for a big guy like yourself with a distribution arm, is that an opportunity for you to take share when perhaps your smaller competitors might be a little more challenged getting access to material? Yeah, Phil, this is Robert. So, you know, I would say maybe compared to the COVID years, maybe not quite as tight as that because there was a lot of, you know, erratic, if you will, demand and supply back then. This is really... You know, maintenance is driving a lot of this as well as the trajectory here of what we're seeing in single family starts. So, you know, as always, if you get back through the years, we'll definitely do our job making sure we get, you know, more than our part of that material. And we're, you know, obviously have constant discussions with our supplier partners around that. You know, as we think about what's happening with the single family starts and especially what's happened in the past few months with that trajectory, I think Rob and I would both say, look, there's price upside here. And you even see some new price announcements, even on the spray foam side of the business that's come out recently as well. So we do expect it to be tight, given all that maintenance, given the single family trajectory, which we think there's upside even on the single family side and some good organic growth there. So I think it will stack up well for TopBuild. To your point about our teams gaining, you know, new customers like we did last year around multifamily and commercial, especially, if you think about mineral wool and some of the other products that you mentioned there, we think it's gonna be a really good environment for TopBuild here in 2024. Okay. And just to follow on to that, Rob, is that pricing that Robert just mentioned, that could be a source of upside? Is that in the guide, or is that something that we could potentially think about if pricing momentum builds? Yeah, I mean, we've got, we've got an assumption for pricing in there. As you know, we don't, we don't break it out, but we would say we think, you know, what, with what we see today, like Robert was seeing, you know, there's potentially upside to the assumption we have in there. Okay. Thank you. Really appreciate the color, guys. Thank you. Thank you. Our next question comes from the line of Michael Rehaut with JPMorgan. Please proceed with your question. Hi, thanks. Good morning, everyone, and, congrats on the results so far. Thanks, Mike. You know, just wanted to circle back to the EBITDA guidance, and, you know, Rob, appreciate your highlighting the $25 million of unusual profit. You know, we kind of backed that out and got to a growth rate, you know, plus or minus, you know, similar to the underlying sales growth, and you kind of pointed out the incremental margins in that 23%-29% range. You know, obviously, you've been able to consistently exceed your incremental margin guidance or long-term targets over the last several years. You know, is there any reason or is there any difference in the market backdrop as you look out into 2024, that might make you, let's say, a little more conservative relative to prior years where you've been able to exceed that incremental margin guidance? Certainly, you know, we talked about the fact that it's gonna be a positive year, housing starts, supply remaining pretty tight in various respects. So, you know, just trying to parse out whether, you know, the guidance here that incremental margin guidance kind of in line with your long term. Is it simply a function of conservatism, or is there anything that, you know, you see on top of that, that might push the incremental margins not to exceed, you know, your those targets like you've done in the past? ... Right, Mike. Yeah, I'd say, you know, the 22-27, you know, folks have asked that question a lot, right? You guys tend to, you know, beat that number, and that's always our goal, right? We're always shooting to do that. When we look at the cost structure of our business and what happens with volume, that's about what we expect to get. But every year, you know, we're working hard with our teams to drive for better than that, right? And we've been very successful in that. We'd rather have that as upside in our guidance, have upside for the things we're going to do to outperform, rather than put it in there. So we're going to be shooting to do better than that here in 2024, just like we did in 2023. But like I was saying earlier, I think, you know, last year, we really did a great job with it, right? With the 108%, same branch EBITDA pull-throughs, and I think, you know, we got to be a little realistic, about those numbers moving forward. Yeah, Mike, this is, this is Robert. I think, you know, as Rob mentioned, on the high end, you know, we're at that 29%, and I, I think the whole market of our company has been known for, you know, the execution piece, to Rob's point is, and how we continually performed in changing environments. And I think, you know, we're pretty well known for that and, and pretty well known for, you know, pushing, pushing the achievement level of the company and our teams. Okay. No, no, I appreciate that. So basically, though, no real difference in the backdrop that, you know, is causing it other than, you know, again, you shoot for better, but, you know, these are still your long-term targets. Is that fair? Correct. I'd say, I mean, actually, going into this year, there's probably more, you know, upside than in most years, right? I mean, I think there's certainly a lot more optimism around where things are going with starts. We've talked a little bit about, you know, the material being tight and the pricing environment. So I'd say, you know, compared to most years when we were sitting here at this time, there's probably more upside than usual. Great. Appreciate that. And I guess secondly, you know, appreciate the update on SPI. You know, you kind of mentioned that, you know, you were asked for some additional information. You know, certainly a lot of this is out of your hands, but any kind of additional take on, you know, that additional request, you know, in terms of if it looks anything outside of the ordinary or if it kind of changes your view at all in terms of, you know, the timing of a potential close or, you know, if it changes your view on what you would expect that, you know, that this is a deal that should close and, you know, just taking a little longer from an information or process standpoint. Hey, Mike, this is Robert. I think you said it well there at the end. It's just taking longer. If you take the environment today with the DOJ, I mean, this is part of the normal process today. You know, one, the process is taking longer, one, asking for more information. And if you take the SPI business, you know, there's kind of three distinct businesses there: the mechanical business, the spray foam business, and the metal building business. So, you know, they're trying to do their part to understand that, and just given the environment, it's just a longer process. We responded very timely to what they've asked for. The process is progressing down the path here. So probably, you know, best we can say is things are still under review, but you can kind of get a flavor given the environment. Great. Thanks so much. Thank you. Thank you. Our next question comes from the line of Ken Zener with Seaport Research Partners. Please proceed with your question. Good morning, everybody. Good morning again. Rob, more upside than usual. I think that says a lot. So here's my question for you guys. October rates were high, mortgage rates. They fell into December. They've rallied a bit since. Can you discuss, like, the bidding cadence that you're seeing from your customers in terms of, right, aspects like the labor, right? Such as material, that's limited labor. How they were thinking about cycle times, as you guys were having those communications with each other? You know, and then any commentary around the larger builders versus the smaller builders giving, perhaps financing constraints. That was my first question. Yeah, Ken, this is Robert. So, you know, I'd say the builders are, especially if you think about the big builders, the production builders, definitely optimistic. Matter of fact, it's kind of a good week, the builder show is going on in Vegas, so we've had a lot of meetings- Right ... with builders. I'd say they're, they're definitely optimistic. And I think, you know, given a little bit of the fluctuation of rates, they still are, given what's happening. I think you got some of the smaller custom builders that, you know, are kind of waiting for that, you know, rates to drop some. I think that happens, they-- you hear that optimism in their voice as well. So, you know, relative to bidding, you know, good bidding activity to start off the spring selling season, which, as you know, starts the end of January. And I'd say very productive conversations with the, with the big builders and what they're planning for this year and what it means from a, from a TopBuild perspective. Okay. And then the second line of questioning is a bit more about your future structure, how it might be changing. I think you said that maintenance repair is about 25% today at SDI, and obviously, I think that's poised to increase. Can you talk to how MRO is contributing to the stability? ... of your business, the margins, the incrementals that you are delivering? I mean, how is that just kind of refresh us ahead of, perhaps this, this acquisition, you know, how that's affected your business versus just having a more cyclical, residential piece, please. Thank you. Sure. So this is Robert again. So yeah, the 25% is our current distribution business, and so I'll give you a few examples. If you think about the MRO side from the commercial industrial, you know, those are kind of like annuities, if you will. There are certain regulations or certain environmental type of things that happen given the extreme conditions of some of those environments and insulation, where that, you know, there's constant repair and replacement of those parts, whether it be, you know, insulation or even some of the kind of jacketing of materials that go on those very extreme conditions or extreme temperature type of environments and stuff. Or you can also think about food and beverage, if you will. There can be some codes and regulations that require that to change. So it is a regular cycle. There is, you know, some kind of repair type of things that happen on the spur of the moment, and there's also some contracts that are kind of longer term that go for that repair and, repair and maintenance work that happens there. And then, if you just think about our standard distribution business, think about all the insulation-related products that we supply, safety products that we supply, gloves, glasses, those types of things that are constantly recurring as well. So it's a real stabilizing environment for that 25% of our business as long as we keep up the great service which we're known for, you know, and we're able to service, you know, on the spur of the moment, which our teams do a great job in the field. So that's why, you know, we focus on that recurring piece of the business. We think it's important. We continue to be able to grow that, and something that we always talk about. Thank you. Thank you. Our next question comes from the line of Trey Grooms with Stephens. Please proceed with your question. Good morning. This is Noah Merkousko on for Trey. Thanks for taking my question. Good morning. Good morning. So first, you noted in the prepared remarks, you know, January weather was tough, no surprise, and I think you said February is looking a little bit better. So just any more color you can give us on how the 1Q is shaping up and, you know, we've still got some time here with March, and I guess if you, you know, think March is gonna be normal from a weather perspective, but basically, you know, do you still see volumes down in 1Q, or just how are you thinking about that? Yeah. No, this is Rob. So, you know, as you look at kind of the seasonality of our, of our guidance there, right? I'd say Q1. When, when you typically look at our quarters, right, the strongest quarters are gonna be Q3, Q2, Q4, and then Q1 in that order, so Q1 is, is the lightest. And then I think as you look, you know, year-over-year, just because of how, you know, 2023 played out, we came into the year with a strong backlog on the single-family side. You know, that, that softened up as the year went on. We had a really strong commercial quarter in the first quarter of last year, so I would, I would say our first quarter, from a comp perspective, is probably our toughest. It was our, our largest, quarter of growth in 2023. With that, you know, I think, you know, we'll still be in that flattish to low single digit type growth for Q1. You know, but we, like we said, January put us behind that a little bit. But what we're seeing in February is we're making up a good part of that, and if things stay good here through March, we should get back to where we expect it to be. Got it. That, that's really helpful detail. Shifting gears to maybe a more longer-term question. You'd mentioned, you know, the multifamily continuing to hold in strong. I think, you know, you noted it'll hold up through the balance of the year. But I guess with, you know, the starts that have kind of come in and the sentiment deteriorating there, at some point, if you think about, you know, maybe later this year or 2025, when you do see, you know, less multifamily construction, do you think that could free up capacity in the industry so that single-family completions could go north of that, you know, 1.1 million? That was the prior peak. Yeah. Good morning. This is Robert. So yeah, I think, you know, obviously, you know, when you think about labor or you think about material, if that does happen in 2025 to your assumptions there, obviously folks will shift towards the single family side. And, you know, as you think about, you know, even from a revenue perspective, the take per unit on a single family is more than a multifamily, so that's a positive for the business as well. So yeah, I think you'll see the industry respond accordingly, and that mix shift will be a positive, obviously. Yeah, and I'd just add, no, I think, I mean, to get to that one-one on the single family side, there's a lot of other variables, right? A lot of products, a lot of labor. You know, what we're excited about is, you know, the long term, right? The demand is there. We know there's short supply, so with a tight labor environment, right, we should see growth for years to come here. Got it. That's all really helpful detail. Thanks for taking my questions, and good luck with the rest of the year. Thank you. Thank you. Our next question comes from the line of Susan Maklari with Goldman Sachs. Please proceed with your question. Thank you. Good morning, everyone. Morning, Susan. Good morning. My first question is focusing perhaps a bit more on the gross margin specifically. You know, you continued to see some nice expansion there. As you think about the coming year and your comments around pricing on materials and those kinds of elements, can you talk a bit about how you think about the sustainability of the gross margin, the path there, and anything on price cost for the year? ... Yeah, Susan, this is Rob. So, you know, from a gross margin perspective, as you said, it was a great year for us in 2023. Now, you know, the $25 million I've talked about kind of one time, you know, Q2, Q3 benefits that we saw, that obviously hit in the gross margin line. And, you know, if you look at the year, you know, you can see Q2, Q3, our gross margins jumped up to 32%. So as we think about 2024, I think we'll be more in that 30%-31% type range. But like we've said, we're always doing what we can on the productivity side to drive improvements there. On the price cost side, we're always, you know, managing that as aggressively as we can to maximize the benefit on that side too. Okay. Yes. That's helpful. And then perhaps shifting to the commercial and industrial side of the business, I think you commented that you expect mid-single digit growth there this year. How much of that is coming from the market versus your own ability to continue to gain share there and outperform on a relative basis? Yeah. Good morning, Susan, this is Robert. So I think if you looked at some of the industry type of numbers, you would see we're above that, as you look at our numbers for commercial industrial. So yeah, I'd say we continue to, the field teams continue to do a nice job of growing that business, you know, continuing to gain traction and, and penetration with the customers across both commercial industrial. I think that's been a great story where our special ops team has focused as well. You know, we talked in the prepared remarks about growing the business top line and bottom line. So our teams have done some really nice work around that commercial industrial, and you see it in our performance. And so that's why we're very, you know, optimistic in our performance around commercial industrial here in 2024 and beyond 2024. Okay. All right. Thanks for the color, and good luck with everything. Thank you. Thank you. Thank you. Our next question comes from the line of Stephen Kim with Evercore ISI. Please proceed with your question. Yeah, thanks very much, guys, and kind of a good luck with everything. It's been a real pleasure. Thank you. I wanted to—my first line of questioning was around productivity and the impact that that could be having on the incremental guide. You talked about overall labor productivity efforts, and you also brought up the work done by your special ops team. So a couple of questions here. You know, how much was generated in 2023 from the special ops team? And you've had this team for a while. Can you describe what the expansion is you're talking about and why, you know, the expansion is, you know, necessary or good now, versus, you know, in the past? And lastly, just to confirm, my understanding is that you typically don't include expectations for the results from this special ops team in your guidance. I just wanna make sure if that's changing or not. Yep. So, this is Rob Kuhns. I'll take the piece around the numbers, and Robert will add some more details around specialty ops. But, you know, obviously, that's a key strategy to our business. It's been a key part of our success for years. To your point, we're, you know, we're not including upside to that in our guidance. So we would say that should be upside because, you know, it's a constant iterative process for us, right? 2023 was a great year, and we don't break out exactly what was tied back to that, but we know, you know, when we talk about that same branch performance we had, you know, even when I pull out the $25 million that we're calling one time, our same branch flow through was 80% for the year, right? So it was a really strong performance, and a lot of that upside is coming from what this special ops team is doing. Robert can give you a little more details around, you know, what the team's doing. Yeah, Steven. So it has been something that we've had. We continue to invest in it. So if you think about our footprint, if you think about opportunities relative to anything from labor productivity, sales productivity, logistics, yields on material, those types of things, we just continue to see the ability. And to Rob's point about the pull-through of the same branch, I mean, that comes from all that work we're always doing. I mean, you hear us talk about maybe we keep using these terms, operational efficiency, driving operational improvement. Whenever we say that, that's the action that's happening, you know, behind the scenes to continue to drive that. And, you know, we see more opportunity. That's the one thing about sitting in our business, is that we continue to see more opportunity there. And you always—it doesn't matter what you're looking at in a business, as you know, you always got a bottom quartile. And so our mindset is you're always uplifting that bottom quartile, whether it be products, branches, customers, that type of thing. So it's just a constant cadence of how we run the business. Yeah, that's encouraging. Appreciate that color. The second question I had related to the SPI acquisition. We had heard that maybe the metal building insulation segment might be, you know, part of the hold-up here. Was wondering if, you know, when you look at the three businesses that come with SPI, would you be willing to split that business off? And if so, would that have any meaningful impact on your anticipated synergies? Yeah. So, you know, as you think about the business, you're right, there's three parts to it: you know, the mechanical, spray foam, and the MBI. You know, the DOJ has been trying to understand all three. I mean, they're good businesses in the SPI model, so, you know, all the information and what we're working with them on has been really across the business here of SPI. We really haven't had to consider, you know, that part about the splitting off and stuff. And, you know, you've known us from the big acquisitions in the past. You know, we're good at driving synergies in the different models and stuff, so it wouldn't be, you know, the synergy piece here with the whole business or it's really not a concern of ours. It's too early to speculate anything, but something we've really not considered, given how the process is, is going forward. ... Okay, so that's great. So that's encouraging. Appreciate all the information, and best of luck, guys. Thanks. Thank you. Our next question comes from the line of Keith Hughes with Truist Securities. Please proceed with your question. Thank you. Two questions. I guess first on the discussion you had on residential and commercial growth in the press release for 2024. Is that a unit comment or is that a unit and pricing in those businesses? Yeah, Keith, this is Rob. That would include price, so it's, it's volume and price in terms of the, the mid-single digit growth. Okay. And second, on the SPI deal, this might be kind of hard to answer in one number because they have a couple different businesses, but what would this take your market share from and to if you're able to successfully complete it in that market? Yeah, I think as we think about the core business of SPI, you know, in the mechanical space, which is the core business of it, it still keeps us in the, you know, double digits, in the low teens, if you will, like the double digits relative to that. Okay, great. Thank you very much. Thank you. Thank you. Our next question comes from the line of Joe Ahlersmeier with Deutsche Bank. Please proceed with your question. Hey, everybody. Good morning, and congrats on the strong finish to the year. Thanks, Joe. And Tabitha, also, congratulations to you, and you will be missed. Thank you. Yeah, if I could just dig in a little more on not exactly SPI, but what it could look like if you don't close it. Obviously, that is allocable capital, even if it's not cash on the balance sheet today. So, you're also going to generate a lot of cash in the year ahead and beyond that. So if you could maybe just talk about your thoughts around increasing the buybacks over time, especially as your pipeline of targets will probably shrink throughout time, right? So is there a way to think about how capital might shift more to buybacks versus the acquisition deployment? Yeah, Joe, this is Rob. So from a capital allocation standpoint, I'd say, you know, nothing's changed with our strategy there. M&A's priority one in terms of, you know, where we see the best returns, so we're gonna continue to deploy capital there. But just like, you know, we've said in the past, we're, you know, that's gonna be lumpy, and we're gonna stay disciplined in our process there. So we always do look at, you know, buyback opportunities, trying to be opportunistic there and weighing it with the pipeline and the, you know, the deals we have coming. So I think you'll see us doing buybacks again at some point as well. But, you know, we're also gonna stay aggressive on the M&A front. Yeah, I would say, adding to that, just say definitely a healthy pipeline. You know, acquisitions, you saw what we did in, in 2023, and then, you know, we've already got three deals that are signed up for, for 2024 here early on. So a lot of, lot of good activity, still very fragmented, a lot of, lot of players out there. Okay. You know, I think oftentimes investors think about this business in terms of the large production builders, but maybe if you could talk to the smaller portion of your business, that, you know, goes into R&R or even tear down construction, with some of the more custom builders. Just anything you're seeing on that front, you know, as we think about, you know, that being part of the solution to solving the underbuilt, you know, construct that we've got. Yeah, so relative to the R&R, the rebuild, I mean, definitely there's a lot of teardowns in the U.S., which constitutes a new start. But relative to the repair model, that's something our Service Partners business does a great job of getting after that. That's probably the smaller contractor that's doing that work. So that's really the target customer. And, you know, we do see, you know, upside in that, whether it be relative to what you're talking about, but then also just relative to some normal repair and maintenance that happens that we see with our smaller contractor customers on the Service Partners side. So we do see that, and that team does a nice job of servicing those customers. All right. Thanks for the time. Thank you. Our next question comes from the line of Rafe Jadrosich with Bank of America. Please proceed with your question. Hi. Hi, good morning. Thanks for taking my questions. And, Tabitha, congratulations. You'll definitely be missed. Thank you. So the first thing I want to ask is just, you mentioned that insulation is still, it's still tight for material right now, but you do have kickoff coming on later this year. In that environment, in a year where you have new capacity coming on, how does that—like, how historically has that impacted your business and your allocation relative to your competitors? Is there an opportunity to take market share with new capacity coming on? Yeah. So, good morning, Ray. This is Robert. So a couple of things there. So, yeah, you're right, new capacity coming on midyear. Now, it will take some time to get the lines up and going there. So although that starts up midyear, you're probably thinking more about, you know, later in the third quarter, you know, running capacity there. And then, as we mentioned, there's a lot of maintenance happening in the industry this year, so it, it doesn't really have a capacity impact here in 2024. And then to your point about, you know- ... From a TopBuild perspective, if you think about when that plant was announced, which I'm gonna say was probably back in 2022, you know, we stated there that we worked with the management team, with Knauf about how they were planning capacity, and planning that operation and stuff. So they're definitely, you know, a good, good partner with us, and we're definitely partnering with them, relative to, to bringing up their new plant there in McGregor, Texas. Got it. Just to follow up on that, like, do you have either, like, commitments or contracts or anything specific around that when there's new capacity coming on that the manufacturer will arrange with you ahead of time? We'll definitely do some advanced planning with them. That's probably the best way to say it. Got it. Okay. And then, the second question is just on your—can you remind us on your multifamily exposure relative to single family? And I know your comment that the backlog sort of stretches through the end of this year. What does that actually mean for in terms of, like, what are you implying in your or baking into your guidance in terms of multifamily? Is that, like, flat for the year, or is that down small? Like, what's the quantification? Yeah, Ray, this is Rob. So I'd say from a multifamily perspective, I mean, in terms of, you know, the market, you know, we're gonna be indexed similarly to single family and multifamily as the market goes. So, you know, we're somewhat indifferent to either. As far as what's in our assumptions, you know, for guidance, we've got multifamily essentially from a units perspective, basically flat, right? So we know starts are declining, but with the backlog we have, we feel like we can, you know, from a what we insulate perspective, have pretty much a flattish year from a multifamily side of things. Okay, thank you. Thank you. Our next question comes from the line of Adam Baumgarten with Zelman & Associates. Please proceed with your question. Hi, this is Marius for Adam. Morning. Quick question on antitrust. Given the attention on the FBI bill, do you have any thoughts on what this could mean for your ability to do other large deals in this space? Yes, as we mentioned, you know, the process is pretty normal today as to what's happening with, with the DOJ, so it's too early to speculate anything there, as we mentioned on a previous question that came up. But, you know, at the same time, we, you know, we operate in a very, very fragmented, environment here across all three, really, residential, commercial, and industrial. So we still see it as a, you know, healthy M&A environment, healthy pipeline out there, you know, for the future. And, you know, M&A is always our first choice, but as Rob mentioned earlier, you know, we think about buybacks and, you know, the best use of capital here. So, you know, we're not speculating on anything here. We're just, going what's the normal process for the DOJ right now and, and the progress... and the process is progressing. Excellent. Thank you. And just another one. Can you provide any further details or thoughts on, you know, the split between industrial, heavy commercial, and light commercial? You know, do you expect all of them to sort of be in that mid-single digit growth, or do you expect some variation between each industry? Thank you. Yeah, Marius, this is Rob. So I'd say not too different between the end markets. So as you know, on the install side, you know, about 15% of our business is commercial. It's roughly 50/50, light and heavy commercial, and I'd say we're expecting, you know, both sides of that to grow in that mid-single digit type range this year. And then on the, you know, distribution side of the business, the commercial industrial piece is, you know, 60% of our business over there. You got, you know, Service Partners servicing, you know, the commercial building side of things, and then you've got, you know, with DI, we're doing the mechanical insulation side of things. And I'd say across both of those end markets, we're expecting kind of that mid-single digit growth as well. Thank you. Yep. Thank you. Our next question comes from the line of Ken Zener with Seaport Research Partners. Please proceed with your question. Thank you so much, guys. I, Rob, I just wanted you to clarify and expand upon the mid-single digit, both the unit and price, and how that is consistent with the trends we are seeing today. With price up, price still tight, seems like you're looking for actually even more conservative volume gains in residential. Is that correct assumption? Thank you very much. Sorry. Yeah, so like we said, I mean, the guidance we've given is, you know, it's price and volume in that residential and the commercial industrial number. From a volume perspective, right, we're expecting on the residential side, you know, single family starts to remain kind at the level they're at today, kind of around 1 million starts-ish, right? So, you know, any upside to that will be certainly upside to our guide. Multifamily, like I said, we're expecting to be, you know, flattish given the backlog. So that leads to a little bit of volume growth. I'd say that, you know, probably low single digit volume growth when you compare that year-over-year. So then we've got some price layered on top of that. And then, you know, similarly on the commercial industrial side, it's, you know, some of those products I'd say are a little less inflationary on that side. So, you know, we've got our assumption for, for price and volume baked into that, that mid-single digit as well. And like we've said, with, with the environment like we see it right now, could there be more price increases and, and more inflation than we're anticipating? You know, that certainly seems probably the more likely scenario. So again, that would be upside to the, to the guidance we've got. Thank you for your clarification. No problem. Thank you. There are no further questions at this time. Thank you for joining us today. We look forward to talking with you in early May when we'll share our Q1 results. Thank you.