Greetings and welcome to Installed Building Products Third Quarter 2024 conference call. At this time, all participants are on 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Darren Hicks. Thank you. You may begin. Good morning and welcome to Installed Building Products Third Quarter 2024 earnings conference call. Earlier today, we issued a press release on our financial results for the third quarter, which can be found in the investor relations section of our website. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are based on management's current expectations and beliefs. These statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those described today. Please refer to the cautionary statements and risk factors in our SEC filings, including our annual report on Form 10-K. We undertake no duty or obligation to update any forward-looking statement as a result of new information or future events, except as required by federal securities laws. In addition, management refers to certain non-GAAP and adjusted financial measures on this call. You can find a reconciliation of such measures to the nearest GAAP equivalent in the company's earnings release and additional reconciliation for EBITDA and adjusted EBITDA for earlier fiscal years in our investor presentation, which are available on our investor relations section of our website. This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer, and Michael Miller, our Chief Financial Officer, and joined by Jason Niswonger, our Chief Administrative and Sustainability Officer. I will now turn the call over to Jeff. Thanks, Darren. And good morning to everyone joining us on today's call. As usual, I will start the call with some highlights and then turn the call over to Michael, who will discuss our financial results and capital position in more detail before we take your questions. IBP delivered record third-quarter revenue and profitability supported by organic growth across all of our end markets. Our record quarterly results highlight the talent, commitment, and focus of IBP's employees across the country who provide our customers with reliable, high-quality building product installation services. I want to mention that late September and early October has been a very difficult time for many people, including numerous IBP employees who were affected by the two hurricanes that hit the Southeast and the Mid-Atlantic regions of the United States. Our thoughts go out to those who have managed through the destruction, and a big thank you goes out to everyone who rallied together and shared resources to support our employees and help restore operations. As we look to the future, the long-term view on demand for our installed service is unchanged. We believe long-term trends across our residential and commercial end markets are favorable as builders work to meet demand through the increased supply of houses, apartments, and commercial structures. Looking at our third-quarter sales performance, I am encouraged by consolidated sales growth of nearly 8% and same-branch growth of 5%. In our largest end market, single-family sales growth was supported by a growing proportion of sales from national production builders in the quarter. Additionally, our deep customer relationships, local market knowledge, and an ability to align our pricing with the value we offer our customers were key to our third-quarter single-family sales results. Our multi-family installation sales growth continued to be resilient with the apparent operational benefits of our centralized service-oriented model. On a same-branch basis, multi-family sales in our installation segment increased over 2%. We continue to see geographic and end market expansion opportunities in multi-family with an ability to sell IBP's installation services in markets where we historically have not had meaningful participation. Strong quarterly same-branch sales growth in our commercial end market reflects positive growth in both the light and heavy commercial markets. Profitability during the third quarter continued to reflect our strategic priority to apply our local market expertise to efficiently complete the most operationally and financially attractive jobs for our local business. This contributed to achieving all-time record quarterly diluted net income per share and Adjusted EBITDA in the third quarter. Acquisitions continue to be our top priority as we consider all of our options for capital allocation. Despite our growth over the years, we believe a meaningful opportunity still exists for us to expand our geographic presence and diversify the mix of building products we install across our national branch network. During the 2024 third quarter and in October, we completed the following acquisitions: an Illinois-based residential and commercial installer of building products serving key markets in the Midwest with annual revenue of approximately $20 million, and a specialty distributor focused on supplying insulation and related accessories and machinery to residential and commercial end markets with annual revenue of over $22 million. To date, we have acquired over $73 million of annual revenue. Based on our current acquisition pipeline, we expect more deals to be completed before year-end. In addition, although deal timing is hard to predict, our current outlook for acquisition opportunities in 2025 is strong. Based on the U.S. Census Bureau, single-family starts year-to-date through September 2024 have increased by 10%. We believe the current pace of starts growth supports a healthy demand environment for our single-family installation services in the near future. Additionally, beyond the typical demand drivers, we continue to believe the United States government incentives and planned mandates toward more stringent energy efficiency standards in new and existing single-family homes will be favorable for our business. Our strong customer relationships, experienced leadership team, national scale, and diverse product categories across multiple end markets are advantages when navigating the ebbs and flows of demand related to the U.S. construction market. Through the prevailing market conditions, we remain focused on profitability and effective capital allocation to drive earnings growth and value for our shareholders. I'm proud of our team's continued success and commitment to doing an excellent job for our customers. To everyone at IBP, thank you. I remain excited by the prospects ahead for IBP and the broader installation and other building product installation business. So with this overview, I'd like to turn the call over to Michael to provide more detail on our third-quarter financial results. Thank you, Jeff, and good morning, everyone. Consolidated net revenue for the third quarter increased 8% to an all-time record of $761 million, compared to $707 million for the same period last year. The increase in sales during the quarter reflected growth across all our end markets and sales from IBP's recent acquisitions. Our residential same-branch installation sales increased approximately 5% during the third quarter. Although the components behind our price mix and volume disclosure have several moving parts that are difficult to forecast and quantify, we continue to experience top-line improvement from a 2.7% increase in price mix during the third quarter. We also experienced a 2.6% increase in job volumes relative to the third quarter last year. With respect to profit margins in the third quarter, our business achieved an adjusted gross margin of 33.8%, down from 34.3% in the prior year period. The margin reductions during the quarter were primarily due to a greater proportion of our single-family sales shifting to production builders, as well as higher growth in non-installation product sales relative to a year ago. Adjusted selling and administrative expense as a percent of third-quarter sales was 18.5%, due primarily to higher insurance expense, facility and warehouse lease expense, and initial startup costs related to building out our internal accessory sourcing efforts from the prior year period. Administrative expenses as a percent of third-quarter sales in the third quarter of 2024 were flat with the second quarter of 2024. Adjusted EBITDA for the 2024 third quarter increased to an all-time record of $132 million, reflecting an adjusted EBITDA margin of 17.4%. For the nine months ended September 30, 2024, same-branch incremental EBITDA margins were 20%. Incremental EBITDA margins can be highly variable from quarter to quarter, but we continue to target full-year, long-term, same-branch, incremental adjusted EBITDA margins in the range of 20%-25%. Adjusted net income increased to $80 million or $2.85 per diluted share. Although we do not provide comprehensive financial guidance based on recent acquisitions, we expect fourth quarter 2024 amortization expense of approximately $10 million and full-year 2025 expense of approximately $37 million. We would expect these estimates to change with any acquisitions we close in future periods. Also, we continue to expect an effective tax rate of 25%-27% for the full year ending December 31, 2024. Now, let's look at our liquidity position, balance sheet, and capital requirements in more detail. For the nine months ended September 30, 2024, we generated $265 million in cash flow from operations, compared to $251 million in the prior year period. The year-over-year increase in operating cash flow was primarily associated with higher net income. Our third-quarter net interest expense decreased to $8 million from $10 million in the prior year period, primarily due to lower cash interest expense following the completion of the term loan refinancing in the first quarter of 2024 and a greater amount of interest income from higher balances of cash and cash equivalents relative to the year-ago period. At September 30, 2024, we had a net debt to trailing 12-month Adjusted EBITDA leverage ratio of 0.94 times, compared to 1.1 time at September 30, 2023, which is well below our stated target of two times. At September 30, 2024, we had $342 million in working capital, excluding cash and cash equivalents. Capital expenditures and total incurred finance leases for the three months ended September 30, 2024, were approximately $25 million combined, which was approximately 3% of revenue, roughly in line with the same period last year. With our strong liquidity position and modest financial leverage, we continue to prioritize expanding the business through acquisition and returning capital to shareholders. During the 2024 third quarter, IBP repurchased 100,000 shares of its common stock in a privately negotiated transaction at a total cost of $21 million, bringing our repurchases for the first nine months of the year to $66 million. At September 30, 2024, the company had approximately $234 million available under its stock repurchase program. IBP's board of directors approved a fourth-quarter dividend of $0.35 per share, which is payable on December 31, 2024, to stockholders of record on December 15, 2024. Fourth-quarter dividend represents a 6% increase over the prior year period. With this overview, I will now turn the call back to Jeff for closing remarks. Thanks, Michael. I'd like to conclude our prepared remarks by once again thanking IBP employees for their hard work and commitment to our company. Our success over the years is made possible because of all of you. Operator, let's open up the call for questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. We ask that you please limit to one question and one follow-up. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd 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 poll for questions. Our first question comes from Stephen Kim with Evercore ISI. Please proceed with your question. Yeah, thanks very much, guys. Appreciate all the information thus far. If you could, I think you mentioned that some of the margin factors that you cited, yeah, I think you cited four of them this quarter: market share by large builders, non-installation sales, startup expenses from internal distribution, and higher insurance. I was wondering if you could give us some general sense of the size of the impacts, particularly the first three. And could you elaborate a little bit on what those startup expenses were for the internal distribution? Sure. This is Michael. So we did see, and as we've talked about multiple times on the calls, that both higher rates of growth from production builders as well as higher rates of growth from the other products definitely have an impact on gross margin. So during the quarter, the production builder business grew at twice the rate of growth of regional and local builders have in the market or had in the quarter, excuse me. And it was actually the same for insulation. So both fiberglass and spray foam combined relative to the other products. The other products grew at twice the rate that insulation grew at. Now, interestingly, the insulation growth rate was impacted by a decline, actually, in spray foam revenue in the quarter. The rate of growth of fiberglass revenue was pretty similar to the other products. In fact, all of our end products saw growth in the quarter, obviously some higher than others, with the exception of spray foam, which saw a mid-single-digit decline in the quarter. That decline, because as you know, because we've talked about it before, I mean, spray foam along with fiberglass is one of our highest margin product lines. The decline and weakness, if you will, in spray foam pricing had about less than 100 basis points impact on gross margin and consequently would have had an impact of anywhere between $1-$1.5 million on EBITDA. In terms of the other impacts in the quarter, the startup expenses associated with our internal sourcing, so this is where getting more facilities for us to be able to internally distribute product to gain efficiencies in terms of that and to prevent us from doing more purchases outside of our normal purchasing network, meaning going to either distribution, outside distribution, or say Home Depot or Lowe's. We're adding facilities for that. And those costs we estimated in the quarter to probably be around $1 million as well. We also, one of the things that Jeff had mentioned in his prepared remarks, we did have an impact from the hurricanes both in September and October. Thankfully, all of our employees are safe. Some of our employees, unfortunately, had some fairly significant losses with their home and property. But again, everyone is safe. But we did lose quite a few days of work in those markets. We estimated that the impact from a revenue perspective in September was probably about $2 million, and it had probably a little bit less than $1 million impact on EBITDA from the hurricanes. Gotcha. That's very, very helpful. And it sounds like these are factors that are probably going to extend into the fourth quarter. Correct me if I'm wrong, but it didn't sound like anything you just described was something that necessarily was just isolated to the third quarter, including the insurance. I guess my next question would really kind of be to shift gears then and talk about the impact of the election. One of the things that I think, well, that we've been wondering about is that perhaps a Trump administration is not going to be as interested in pursuing some of the energy efficiency initiatives and new construction, and that that might actually result in an energy rollback. Another one of his priorities has also been labor, well, deportation. I was curious if you could comment on what you think maybe a Trump presidency and executive actions might, what kind of impact that might have on either your labor base or the plans for building to tighter energy codes in 2025? This is Jeff. So I guess first on the energy code question, we've never banked on, well, one, we don't know what he will do, obviously, but we've never really even internally banked on the idea that the most recent legislation that's been passed. It was a couple of years out, even anyway, the Fannie and Freddie-based energy improvements. So internally, just as we have for decades, I think we're banking on the normal kind of gradual, both at the local and sometimes the statewide basis adoption of just the normal stricter progressive energy codes, not the kind of supercharged information that none of us have really been banking on. So that's, I think, where we are in regards to the codes. I think from a labor perspective, I think for the last 30 years, we've been able to hire and train a workforce that gets a job done for us, I think, under pretty much any circumstances. It'll be business as usual. I've said this before. Even during the Great Recession, we had to hire people and train people. So that's just the nature of this business, like any other construction business, even though we've done well in terms of improving our retention rates as compared to the market and as compared to the industry, it's still a high turnover business. So I think it's probably business as usual, kind of go forward basis. Yeah, and I think, yeah, this is Michael. I think something to note relative to the energy code aspect is, I mean, as I think pretty much everyone on this call knows, when Owens Corning announced their earnings, they also announced an expansion in their Kansas City facility, and that is not predicated on, I believe they said that it was not predicated on any of the increased energy codes that we've been talking about relative to Fannie and Freddie. It's just that we're all seeing good demand, and as the shift in starts normalizes between single-family and multi-family, that creates more demand for fiberglass. So we saw that as a very good, solid endorsement for the industry as a whole. Absolutely. Our next question comes from Susan Maklari with Goldman Sachs. Please proceed with your question. Thank you. Good morning, everyone. Morning. Morning. My first question is on the mix within the business. We saw volume versus price mix really come in very closely in line with each other this quarter for the first time in a very long time, probably. What does that say about operating conditions on the ground? Does it suggest that we're closer to some normalization with that? And do you think that those two will stay closer as you look out from here? Is that something that we should be anticipating as we think about the next several quarters or years? Yeah. I would think of it in terms of years and not in terms of quarters because, as you know, there's just a lot of volatility in the way that just the makeup of the way that we disclose the volume and the price mix, and there are so many puts and takes into that that it is difficult to say for certain what's going to happen quarter to quarter, but I think on a full-year basis, and particularly as we look at 2025, we would like to see more normalization between the two. I would say, though, that we think some of the trends that we're continuing to see that we saw in the third quarter and that we will continue to see in the fourth quarter are really more elevated towards volumes being higher than price mix. We continue to be in a benign inflationary environment, and we're continuing to see good growth from the production builders and on the single-family side. Some of the preliminary survey information from the builders that we've seen suggests that October single-family starts were up anywhere between 10%-14%, which we think is very solid. We feel that multi-family is stabilizing in terms of the rate of decline. We are seeing bidding picking up in the multi-family side. I mean, our CQ team, which we've talked about before, that's centralized for about 40% of our multi-family business, they're continuing to see very good bidding. They're doing an incredible job of diversifying the products that they're successfully winning bids on in terms of the other products, not just insulation. So we feel very encouraged about sort of where we're headed as we go into 2025 from a single-family and a stabilization in multi-family. I mean, clearly, multi-family is going to continue to be a headwind in the fourth quarter and into the first half of next year. But we feel confident about our long-term ability in multi-family to continue to gain market share and really provide incredible value for the services we provide. Okay. That's helpful. And then turning to G&A, I know you mentioned this a little bit in the prior question, but just as we do look out, can you talk about the ability to leverage those costs over time? Yes. Volume obviously helps. If your G&A is, it's somewhat stagnant, if you will. I mean, it grows with inflation. But I mean, if you look at, excuse me, G&A relative as a percentage, SG&A as a percentage of revenue from second quarter to third quarter, they're basically in line a little bit better in the third quarter. We did have some additional expenses that we talked about, both on the insurance side as well as some of the startup costs associated with the internal sourcing strategy, which I think, as we pointed out in the previous question, is our cost that will continue to be there. I would say that if you look in the third quarter of last year, I mean, our adjusted selling and administrative expense percentage was one of the lowest we've had in a while. And if you look over the past four quarters, where we are now is pretty much in line with where we've been for the past, well, now five quarters, I guess, four quarters. But so yeah, we're very pleased on the gross margin front, quite frankly, given the headwind that we had with spray foam and the real significant headwinds that we had with both the production builder business and the other products growth growing as well as they did. Quite honestly, that the gross margin held up as well as it did, given those three factors, was very impressive. It was a great job from the team to make sure that that happened and that we didn't lose too much margin given those three things happening in the quarter. Yeah. No, the gross margin was very impressive. Well done to everybody there, and thank you for the color. Good luck with everything. Thanks, sir. Our next question is from Michael Rehaut with JPMorgan. Please proceed with your question. Hi. Thanks. Good morning. Thanks for taking my questions. And nice job on the quarter. I wanted to first kind of revisit, you kind of mentioned how pleased you've been with gross margins. And I guess when you look at over the last two or three years, from 2022, you had gross margins at 31%. They were kind of at 30%-31% from 2020 to 2022. And then from 2023 on, it's kind of taken a structural shift almost, it looks like, into the high 33% range. Last five, six quarters, you've been above that number. At the same time, the SG&A has also popped up a little bit. And you're looking at mid-18s for the last four quarters as well. Before that, you were doing 16%, 17% or a little under 18%. Can you kind of walk through what's changed in the business? Are we structurally now just looking at kind of a high 33% and a mid-18% SG&A? What might allow that? Do you feel like that's kind of a structural change, or are there any kind of factors that might allow for reversion in either of those metrics over the next 12-24 months? Yeah. I mean, we continue to feel, and I get that this is a wide range, but we continue to feel that sort of that 32%-34% gross margin is consistent. If you look, and you pointed this out, over the past five quarters, the adjusted gross margin has averaged 34%, right? We've been bumping around that high end of the 32%-34%. There will be puts and takes quarter to quarter, but that 32%-34% on a full-year basis range, we're very comfortable that we can maintain that, and that makes sense. In terms of the adjusted SG&A percentage, it will vary quarter to quarter just because of some seasonality in the business. The more volume we have, the better leverage we obviously get on SG&A. We would expect that over time, we would be able to improve that leverage. I would say, though, that what happened really in 2023 and is still happening to some extent in 2024 is that all of the inflation in cost of goods sold happened very quickly during the 2021, 2022 timeframe. SG&A expenses, because they are lagging both up and down, it takes time for them to filter through. So things like rent expense, right? If you have a three-year lease, you're committed to that expense, and then when it renews and rates are much higher, then you experience the higher rental rates. And that's true of all facility costs, quite frankly. It's true that our G&A employees, our administrative employees that are at the branch and also at the corporate office, it took time for the inflation in that labor component to fully work its way through the P&L, quite frankly. So the run rate dollar value of run rate of sort of G&A where we are right now is fairly consistent. And we would expect that as we go through 2025, and I'm focused primarily on G&A and not on selling expenses because they're much more variable to revenue, we would think that they would be typically based solely on a typical 3% to 5% sort of inflation rate. Of course, acquisitions come with their own G&A, and they add G&A when we do those deals. All right. No, I appreciate that answer, Michael. I mean, maybe just kind of further kind of delving into the gross margin. Obviously, as you just mentioned, the last several quarters, you've been right at the high end of that 32%-34% range. This quarter, 33.8% despite negative mix from production builders, from non-insulation sales, from other items, and you're still kind of at that higher end. So I'm just kind of curious if you, again, there are certain factors maybe that are keeping you at that higher end that are in place today that maybe you feel you can't bank on over the next couple of years. Is it just as we see more greater growth in production and non-insulation, if that's going to push it, let's say, more towards the middle of that range? Just any thoughts in terms of why you've been able to sustain at that higher end? Yeah. I mean, I would say, and this is consistent with what we've been saying for the past several quarters, is that the reason we give the range of 32%-34% on the gross margin is that, yes, the higher level of production builder sales, which we think is something that a trend that is going to continue. Although I would say that in October, we had similar sales rate growth from the production builders as we did from the regional and local builders, so we were glad to see that, quite frankly, but clearly, over time, the growth of the other products and that production builder business will put pressure on gross margin. It's up to our team to work and strive to make sure that when we're doing that work, that we're lifting up the other prodducts' margins and that we're doing the best job for the production builders and are as most efficient as possible so that we can get the most value out of those sales as well. So I mean, I think it's something that we will continuously work on. We are a highly gross margin-focused and EBITDA dollar-focused company. And the team has done an excellent job of performing, and I think they will continue to do that. Our next question comes from Adam Baumgarten with Zelman & Associates. Please proceed with your question. Hey, guys. Good morning. Just on spray foam, can you remind us what percentage of revenue that accounts for and also how much of a headwind pricing was in spray foam to overall price mix? Spray foam is about 10% of overall revenue. We estimate that it impacted gross margin less than 100 basis points. Okay. Got it. Thanks. But more than the decline from second quarter to third quarter in adjusted gross margin. Okay. And that should stick with the business probably for the next few quarters, right? Yes. Okay. Got it. And then just on multi-family, that's been decelerating a bit. I think you made the comment that it's stabilizing. Do you expect that to turn negative either in the fourth quarter or even in the first half of 2025? I know you said that it could still be a headwind over that timeframe. Yeah. I mean, it's definitely going to be a headwind. And the comment about the stabilization was really more as it relates to starts. And as you know, the start to install on multi-family is much greater than the start to install on single-family. So even with starts stabilizing and maybe even coming up a little to a more kind of normalized level, it's going to take a while before we feel the impact of that. So it's definitely going to be over the next couple of quarters more a negative than a positive. Although I would say that our team, CQ, which we've talked about a lot, they represent about 40% of our multi-family revenue, are doing an incredible job of keeping their backlogs up and really maintaining their pace of sales. So we feel good that we will continue to perform better than what the overall market opportunity would present itself in multi-family. Okay. Got it. Good to hear. Best of luck. Thanks. Our next question comes from Philip Ng with Jefferies. Please proceed with your question. Hey, guys. This is Maggie on for Phil. I wanted to dig into your demand outlook by customer type. It sounds like production builders are growing a lot faster than your more regional, local, but you're still seeing growth in the regional builders. But with rates ticking up the last month or so, I think those regionals have less leverage to things like rate buy-downs that maybe the production builders are benefiting from. So maybe if you could just talk about what you're hearing from your different customer types on the demand outlook there. It's more encouraging than we would expect, given you're absolutely right, what happened in the rate environment. I do think that there's been volatility in traffic and demand perspective for the builders. And I think, obviously, I don't know, but I do think that having the election behind us and taking out the uncertainty associated with the election is going to help. And we'll see where rates go over the next three to six months. But I would also agree with, or we would agree with your statement, that there's a lot more flexibility among the production builders to do rate buy-downs than the regional and local builders. Not to say that they don't do it, but they certainly don't do it to the extent that the production builders do. So I think it continues to be similar to the environment that we had in the first half of this year, where the current operating environment continues to favor production builders, and the production builders are leaning into continuing to gain market share. Got it. That's helpful. And then the outperformance in multi-family, or I guess continued positive performance, and you've talked about opportunities for expansion in multi-family. Is that more organically, or are you seeing M&A opportunities in that space? And then are you talking about geographic expansion or actually increasing penetration of other products for those end markets? Yeah. Both. Yeah. Other products and geographic expansion. Yeah. It's not acquisition-related. It's really organic geographic expansion and other products. Yeah. Okay. Great. Thanks, guys. Sure. Thank you. Our next question is from Trey Grooms with Stephens. Please proceed with your question. Hey, good morning, everyone. So you're not facing any inflation right now on fiberglass, or I guess no new pricing actions from insulation suppliers right now. But kind of thinking maybe higher level and a little longer term, as we think about the supply demand picture for 2025, I mean, there's going to be some puts and takes, I understand. But do you think the dynamics are at play that will lend itself to a more kind of inflationary environment, or how are you looking at it maybe, again, from just a high level? This is Jeff. Supply continues to be tight despite recent capacity adds. Honestly, I mean, as Michael mentioned earlier, I think it is good news for Owens Corning. Quite frankly, all of these capacity adds that we're talking about are not probably going to make it by any means a free-flow market for a number of years, in our opinion. So it'll continue to be tight in that regard. As Michael also mentioned, we're doing things to not get in the same position we've been in sometimes when material was tight historically in terms of being able to satisfy internally some of our more emergency-like purchase needs. So that part will be good. But I think it'll be a healthy environment. I think it'll be a rising-price environment. And that's kind of the way we see it for the next number of years, I think. There's other manufacturers even looking at capacity adds, but that's a long process. If it's a complete new build, it's three years-ish plus. And if it's adding a line in an existing facility, it's still in the neighborhood of 30 months, as Owens Corning pointed out, 24-36 months. Yep. Okay. Thanks for that. That all makes sense. And I did want to kind of circle back, Michael, to one comment you had. And sorry if you dug in deeper than I heard. But so you mentioned that the trends in the third quarter should continue into the fourth. And I believe you were talking about how volume is better than price mix. So could you go into that a little bit deeper? Is that saying that you kind of expect a very similar picture, or is it more a thought of maybe a little more deceleration in the price mix at all from here, or stabilization or growth in volume? Just how do we kind of think about that comment a little more specifically, if you could? Yeah. It was really more related to kind of 2025 and all of 2025, in that if the trends that we're seeing now continue, that is, higher sales from the production builders, lower multi-family sales, and higher other product sales, that we would expect volume to be greater than price mix. Understood. Thanks for the clarity there. That was helpful, and good luck, and talk to you soon. Thanks. Sounds great. Thank you. Thanks. Our next question is from Keith Hughes with Truist Securities. Please proceed with your question. Keith, are you muted? Keith Hughes, are you there? [Crosstalk] Okay. Sorry about that. I'm not sure what happened. That's okay. I'll be back to my question. If we look at price versus cost, specifically on fiberglass, how has that been running third, fourth quarter? Is it a headwind at this point? I would say it's fairly neutral. I would say maybe slightly negative, but neutral to slightly negative. Is that something that's going to continue through the winter months? Yeah. I would say that the third quarter reflected the negative aspect of the price cost there. So yes, it would continue, but it's similar to what we experienced in the third quarter. Got it. Thank you. Sure. Our next question comes from Mike Dahl with RBC Capital Markets. Please proceed with your question. Thanks for taking my questions. Yeah. The first one's actually just to follow up on that. Can you talk us through kind of the cadence through the quarter of the spray foam pricing dynamic? And given your exit rate into kind of October, should we be thinking about similar impact in 4Q, or did it decline through the quarter such that the run rate impact in 4Q is still going to be a little bit greater than what you saw in 3Q? Yeah. We'll still have a similar impact in the fourth quarter. Okay. And similar question on the distribution investments. As you think about kind of ramping those, I know they're going to continue, but in terms of order of magnitude, thinking about 4Q or into 2025, is it similar order of magnitude, or is there going to be an incremental ramp there? It won't be a significant incremental ramp, but it will slowly increase as we continue to add more points where we can gain efficiencies in this internal sourcing. So it will be lifting G&A, but at the same time, we should be getting benefit from a cost-of-goods sold perspective because we're gaining, again, benefit from sourcing internally as opposed to externally sourcing some of the materials that we need. Okay. Thank you. Sure. Our next question is from Jeffrey Stevenson with Loop Capital Markets. Please proceed with your question. Hi. Thanks for taking my questions today. So commercial organic sales increased 6% after you saw year-over-year end market declines last quarter. And just wondered, was this more a function of a tough second quarter comp, or did you see any sequential improvement in commercial demand? And then can you talk as well about whether there's been any negative impacts from project delays in either your lighter or heavy commercial businesses? So, as I think we mentioned on previous calls, we had been previously struggling with the performance of our heavy commercial business, but that we have kind of gotten it back to the point where it's both gross margin and EBITDA performance is acceptable to us again. And as a consequence, we've given them the green light to go ahead and start increasing revenue at these higher margin levels. And really, what you're seeing is the benefit associated with that. And it is really the growth in commercial was primarily driven by the heavy commercial business. The light commercial business, as we've talked in previous quarters, continues to be soft. And we expect that to be the case as we go through the rest of this year. And certainly, we would expect it to, the light commercial business, that is, be on very good footing in the back half of next year, but it may continue to be a little weak in the first half of next year. But the heavy commercial business, and we have to shout out to the team there, they've just done an outstanding job of really improving that business and now starting to grow that business at a decent clip, but most importantly, at our profit expectations for that business. So we feel really good about the team there and the progress that they've made in actually fairly short order given the position that it had been in. No, that's great to hear. And industry supply constraints have been brought up quite a bit here on the fiberglass side. Did it have any negative impact at all on your volume growth in the third quarter? And then can you talk about how you're positioned from an inventory perspective into the fourth quarter, given the ongoing supply constraints you're seeing? Yeah. I mean, despite our comments about the supply being tight, I mean, it wasn't to the point where our jobs went uncompleted as a result of material shortages. So I didn't mean to imply that necessarily. So I don't really think that it had an impact in that regard. From an inventory perspective, I think this internal sourcing that we're doing is helping. We're doing a much better job of managing inventory internally and making sure that the right material gets to the right branches, which is helping alleviate the pressure that we would normally experience in an extremely tight environment like this. Our next question is from Reuben Garner with The Benchmark Company. Please proceed with your question. Thanks. Good morning, guys. So a couple of clarifications for me. Michael, I think you used the term normalization when discussing volume and price mix. And I know the way you guys report it and the impact of multi-family can kind of have an outsized either benefit or hurt. Is the expectation that price mix may actually show up negative at some point over the next 12 months as we kind of normalize demand between single-family and multi-family? Is that the normalization comment? If you could just clarify that, that would be helpful. Yeah. As you know, what is sort of a headwind to price mix are less multi-family and more production builder and more other products, right? And we see that we believe that trend will continue in the fourth quarter and as we go through, certainly, the first half of 2025. And as a consequence, it'll be a large headwind to price mix. Okay. And then I don't believe we've heard or seen any price increases announced from the manufacturers yet for fiberglass in early 2025, at least not in the U.S. Can you just talk about and remind us it's been a while since that's been the case, I think, and maybe that'll change. But if they were not to announce one for January, can you just talk about your discussions with customers, how offsetting other inflationary pressures work in your negotiations? I know that you're pricing a job and not necessarily just the material, but if you could kind of walk us through what that would look like in that scenario, that would be helpful. Yeah. So this is Jeff. So I have little doubt that the manufacturers will, in fact, seek a price increase. They typically don't announce any earlier than about six weeks from when the effective date, and that's even slid at this point sometimes. But over the last number of price increases where it was delayed even slightly more than that, but generally speaking, it's called six weeks. So we're not yet past the timeframe that wouldn't and couldn't result in an early next year price increase, not just the announcement, but even taking effect. So that's what I suspect. It's still a healthy housing environment despite it being choppy at times and choppy in certain places. And so I anticipate that we'll be having conversations with builders with that as the backdrop, right, that we'd be facing material price increases potentially from the manufacturers and other inflationary pressures. And so then it's our job to work with our good customers and builders to come to a satisfactory solution for everybody. This is what we do. I mean, it happens every day, every week, every month, every year, so. Our next question is from Kurt Yinger with D.A. Davidson. Please proceed with your question. Great. Thanks. And good morning, everyone. Just one for me. A lot of discussion, obviously, on gross margin and SG&A, but I wanted to kind of bring it back to EBITDA incrementals. And I was just curious what kind of external variables, internal focus areas you think will be kind of most important as you hopefully go out and deliver against kind of the long-term targets, maybe putting demand aside. It continues to be I mean, we want to limit growth in G&A and continue to maintain gross margins in that sort of 32%-34%. Obviously, we've been closer, as we talked earlier, to the 34% and continue to see good volume gains and good sales growth. I mean, that really is how you end up with the 20%-25%. And ex the dispositions for the nine months, we're at the low end of our incremental target ranges, but still within the range. So we continue to feel very good that on a full-year basis, looking at 20%-25% is the right way to look at the incrementals from the organic same-branch business. Okay. Thank you. Sure. Our next question is from Ken Zener with Seaport Research Partners. Please proceed with your question. Good morning, everybody. Morning, Jeff. What a quarter. It seems like you've been exceptionally disclosure-oriented this morning, Michael, I must say. Is that good or bad? No. I think it's exceptionally important at a time like this when we're having cross-currents, right, on the macro related to rates, even though demand is there and it could be picking up, and how inflation, i.e., gross margins, are going to translate in that type of environment for a distributor installer, right? So I think it's exceptionally important. So I'm going to try going back at this gross margin question. It seemed to be the bulk of people's focus today. Your gross margins went down 2016 into 2018 about 200 basis points. That's about 29%. Call it 150. 29%-28%. Can you walk us through at that time what caused gross margin degradation? Because it seems like you're kind of happy, actually, 32%-34%. You're at the high end right now, but it could be at 32%, and you'd be okay with that. You wouldn't have any fire alarms. So could you just walk us through the last time you kind of saw that gross margin pressure exist in your business? And if those are the factors, that would be necessary again? Yeah. The material was extremely tight because there was the fire at the Knauf facility. Was it Knauf? Yeah. Sorry. It's been a while. A lot's happened since then. And yeah, a lot has happened since then. And at the same time, the Fed was raising rates, right? And the current environment where rate buy-downs are very prevalent did not exist. So there was tightening in the market at the same time that there was increasing. The manufacturers, quite frankly, were taking advantage of the situation, the tightness of the situation. And it was a unique period where we had an extended period of time between when we could align our pricing with our customers with the cost increases that we were experiencing. But over time, we were able to get there. It just took longer because of the unique, unfortunate aspect of both a negative housing market and this catastrophic event happening at the same time. Right. But tight supply exists today. Rates, the Fed rates. Yeah, but there's a difference, Ken, between a tight supply environment and an almost emergency supply environment, right? Because what. Right. No, I agree. I agree. Yeah. Because what happened when the Knauf plant went down is it caused tremendous panic buying. I would say that material is tight now, but there's not panic buying in the market at all. I mean, people might be a little more over-inventoried than they normally would be, but that's been the case since 2022, right? So the demand that the fiberglass guys are seeing right now is reflective of the demand in the market. And in our opinion, there's nothing extraordinary or unusual about that relative to the overall market demand. Excellent. And then, Jeff, Mr. Edwards, if you could illuminate us with some regional commentary. Since you guys are talking about the public builders, their order rates have been more flat year over year. Their inventory, while generally flat to up, has had a lot more completed specs. So could you baseline first, when you use the term large production builders, what% of sales that is? Units, sales? Whatever you prefer. And then if you could kind of comment on the rising dispersion we're seeing amongst the different regions in the U.S. because Tampa is different than Orlando. Dallas is different than Austin. But if you wouldn't mind dipping your thoughts into that bucket so we could perhaps understand how that impacts your margins as you see them. And if not, why not? Thank you. Yeah. Michael's hit on a lot of that. But even before I do that, I was relatively speechless on that last question. And I still am marveling at the fact that Michael's only a few months younger than I am, and he could actually remember all of that. Yeah. I think to answer, we've talked a lot about the larger production builders taking share in a lot of first-time home buyer-type product, the fact that they, in some instances, are nearly 100% spec. We had a conversation around that yesterday, which has a lot of good aspects, really, to it for us and for them. As you might guess, the SMILE, per se, still outperforms what we would deem kind of our Northeast region and our Central region. In both cases, those two regions are probably heavier with the regional-type builders than they are, and then you are in the rest of the SMILE. So that's really where we've seen kind of pressure in terms of the geography, and we don't see this trend necessarily abating anytime soon, given what is expected, I guess, of rates and kind of given where the market is. Yeah, and I think, as Jeff pointed out, I mean, right now, starts for the production builders or starts for single-family is more important than orders because of the shift towards spec homes, right? I mean, the percentage of spec homes for the production builders is, I believe, at the highest level it's ever been. That does not show up in orders, right? But it does show up in starts. So we've been, we track all of the public builder information and track it up against our markets, track it up against our sales to them and everything. We do believe that right now, starts is a better indicator of what's going to get built than their backlog or their orders. We have reached the end of the question and answer session. I'd now like to turn the call back over to management for closing comments. I'd just like to thank all of you for your questions, and I look forward to our next quarterly call. Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.